Claire’s Stores, known for ’tween jewelry and ear piercing, has become the latest victim of the retail apocalypse.
The company filed for bankruptcy Monday and said it reached an agreement with creditors including its private-equity backer, Apollo Global Management, to restructure around $1.9 billion in debt.
Claire’s has stores in Lindale Mall in Cedar Rapids and Coral Ridge Mall in Coralville.
Its plan to survive rests on its reputation for trendy merchandise and a unique service that it says can’t be replicated by shopping online: ear piercing.
“To date, the company estimates that it has pierced more than 100 million ears worldwide,” Claire’s Chief Financial Officer Scott Huckins said in court papers as part of the Delaware Chapter 11 filing.
The company began piercing ears in 1978.
But even a business model that “remains a compelling proposition over the long term” wasn’t enough to immunize the company from a decline in mall traffic, which fell around eight percent year-over-year, Huckins said in a court affidavit. The company also had too much debt, costing it $183 million a year alone in interest payments, he said.
Claire’s is the latest in a string of recent U.S. retail bankruptcies including children’s clothing chain Gymboree, athletic gear seller the Sports Authority and toy seller Toys “R” Us.
A voluntary Chapter 11 filing typically allows a company to keep operating while it works out a plan to turn the business around and pay its creditors.