Claire's Stores on Friday announced its exit from Chapter 11, noting in a press release that the company eliminated $1.9 billion of debt and gained access to $575 million in new capital.
The retailer may not be finished regrouping however, considering a report from news agency the Press Association that Claire's is mulling the closure of U.K. stores. But in an email to Retail Dive, a Claire's spokesperson said there are "no plans for either a CVA [a U.K. process that provides for financial restructuring] or major store closures in the UK in the foreseeable future" and that "[a]ny stores we do close or open in the UK would be as part of our normal course of business."
The company filed for Chapter 11 bankruptcy protection in March, but the proceedings didn't affect its international subsidiaries, according to its announcement at the time. The company runs 1,005 stores in Europe as of Aug. 4, according to a company press release.
Claire's teetered toward bankruptcy for years before its filing in March, and it was prepared with a restructuring plan on day one.
Like many retailers that struggle to turn aroundtheir business,private equity ownership and its attendant debt load hampered Claire's Stores' efforts to stem falling sales. Apollo Global Management took Claire's private in 2007 in a $3.1 billion leveraged buyout.
Apollo's control came under fire during Claire's contentious bankruptcy process. After filing with a pre-negotiated reorganization plan, one of Claire's lenders, Oaktree Capital Management, blasted the plan and said "there are serious questions regarding the independence of [Claire's] and their decision making from their controlling equity sponsor." Oaktree challenged the plan throughout the case and even planned its own bid for Claire's, but in the end the investment firm accepted revised terms and relented in its objections.
With that fight behind it now, the retailer's exit from Chapter 11 means the company can now make needed investments, a Claire's spokeswoman told Retail Dive in a statement.
"Recently emerging from the Chapter 11 process in the U.S. has enabled us to financially restructure ... so we are now in a better position than ever to be able to invest in the business further, especially in our vitally important store portfolio as we continue to grow and expand the Claire's business,” she said.
The issues leading to the retailer's U.S. restructuring are still visible overseas, however, according to Kate Ormrod, lead retail analyst at GlobalData. Claire's shuttering stores in the U.K. would be a "move long overdue," she added.
"Having continually lost relevance in the jewelry and accessories market, the news that Claire's is seeking to rid itself of stores is no surprise," she said in comments emailed to Retail Dive, noting that the retailer struggles against the likes of Primark and New Look and its young shopper base doesn't have the funds to shop much.
"Closing loss-making stores and investing in its remaining branches will help to modernise its brand image and enhance the shopper experience," she said. "However, the retailer will achieve little unless it overhauls its product proposition and streamlines ranges to avoid duplication and an overwhelming in-store environment."