Claire’s, the beloved purveyor of cheap jewelry and other colorful accessories, has once again declared US bankruptcy. It’s the company’s second trip through this process. The company is up against a harsh headwind thanks to a historic drop in consumer discretionary spending. Increased competition from online retailers, notably Amazon, is exacerbating these headwinds. The filing is yet another difficult turn for Claire’s, which had previously filed for bankruptcy in 2018.
With approximately 2,750 stores across North America and Europe, Claire’s has struggled to maintain its market share as fewer customers opt to purchase its products. The company operates under two brand names: Claire’s and Icing, and it provides ear-piercing services. The pandemic-accelerated move towards online shopping has taken a toll on their bottom line.
Chris Cramer, Claire’s chief executive, admitted in a recent earnings statement that the company is under pressure. He pointed out that “increased competition, consumer spending trends and the ongoing shift away from brick-and-mortar retail” have all contributed to the decision to file for bankruptcy.
Claire’s faces challenges beyond just competition. Now its global supply chain will take a hit with tariffs on the products it makes, further deepening its already precarious financial state. Today, the company has about 300 franchised outlets primarily in the Middle East and South Africa. Ubiquitous as those towns may be right now, they aren’t immune to the challenges that are hurting the brand.
Across the pond in the UK, Claire’s has around 280 locations — a decline from 370 stores in 2018. This drastic decline is indicative of a larger trend that all physical retail locations have been facing as consumers shift their preferences. The company has concession stores in thousands of other retailers across Europe and the US. This strategy has not been sufficient to make up for the losses they’re incurring.
“This decision is difficult, but a necessary one,” Cramer emphasized, highlighting the tough choices facing the company in an increasingly competitive landscape.
Now, with investment giant Elliott Management among its owners, Claire’s is hoping to ride out this stormy stretch and come out healthy on the other side. The future is anything but certain as it seeks to evolve in order to keep pace with rapidly changing consumer habits. Simultaneously, the dominance of online shopping only keeps growing.