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The accessories retailer, and nostalgic site of many teens’ first piercings, faces difficult times.
It seems another mall staple may be coming up short. Teen retailer Claire’s is preparing to file for bankruptcy after several years of struggling to pay off debt incurred during its 2007 buyout by Apollo Global Management, according to a Bloomberg report citing unnamed sources.
Like many retailers struggling to keep up with discount and online retailers, Claire’s has struggled with dwindling customer numbers, even trying to stock products in drugstores or supermarkets.
Despite refinancing, reducing promotional activity and closing 166 stores, Claire’s hired investment banker Lazard in January to get a handle on its debt—a move usually foreshadowing restructuring or bankruptcy. While Claire’s has seen sales growth for the first three quarters of 2017, most of its cash flow goes to paying its debt.
The retailer is nearing a deal with its lenders, including Elliott Capital Management and Monarch Alternative Capital, which would take of the company during bankruptcy. According to The Hollywood Reporter, the deal will have Claire’s retain operation of its more than 4,000 locations worldwide while paying its bills.