Tween retailer Claire’s has lined up a buyer for up to nearly 1,000 of its stores, keeping the mall staple alive under the new ownership and avoiding liquidation of the chain.
Hoffman Estates, Illinois-based Claire’s on Wednesday said it had struck an agreement with Ames Watson for that Columbia, Maryland-private holding company to acquire its business operations in North America. That deal encompasses no less than 795 and potentially as many as 950 of Claire’s roughly 1,500 stores and the retailer’s intellectual property rights, according to bankruptcy court filings. Those stores are slated to stay open.
As part of the agreement with Ames Wason, Claire’s is halting going-out-of-business sales at “a significant number” of stores, but they will continue at the remainder of the company’s brick-and-mortar fleet in the United States and Canada. Unless Claire’s finds a buyer for any of its other assets, that means anywhere from about 550 to 700 of its stores will be shuttered.
Earlier this month Claire’s — a seller of jewelry and accessories to tween and teen females — filed for Chapter 11 bankruptcy protection for the second time in seven years. The retailer blamed its financial woes on competition from online retailers; new rivals; changing consumer habits and a shift away from malls; the impact of tariffs; underperforming stores; and burdensome lease obligations. Claire’s first filed for bankruptcy in March 2018.
While it’s somewhat unusual for a retailer company to be rescued from liquidation after a second bankruptcy, it’s not unheard of. Henderson, North Carolina-based Variety Wholesalers bought just over 200 leases for Big Lots stores as part of a Chapter 11 proceeding, keeping that chain alive.
Claire’s next chapter
Ames Watson is looking forward to supporting the “next chapter for this iconic brand,” Lawrence Berger, the firm’s co-founder, said in statement.
“Claire’s has built a powerful emotional connection with generations of consumers through its focus on self-expression, creativity, and accessible fashion,” Berger said. “We are committed to investing in its future by preserving a significant retail footprint across North America, working closely with the Claire’s team to ensure a seamless transition and creating a renewed path to growth based on our deep experience working with consumer brands.”
Court documents said that under the sale agreement Ames Watson will pay $104 million — subject to purchase price adjustments — in cash plus a $36 million seller note; assume certain liabilities, including rent associated with the assigned contracts; and provide continued employment of a significant number of Claire’s employees.
Claire’s, which owns not only its namesake chain but also Icing, with merchandise for the 18-to-28 consumer, declined to comment beyond its remarks in its announcement. Ames Watson didn’t respond to an email from CoStar News seeking comment.
Ames has retail stakes
Ames Watson, founded by Lawrence Berger and Tom Ripley in 2018, has over $2 billion in annual revenue. It owns or is invested in such retailers and other companies as Lids, LidsU, Unrivaled Teamwear, South Moon Under, Mitchell & Ness, Ebbets Field Flannels, Zygo, Hungry and Margaux.
Under terms of the sale, Ames Watson will assume some of Claire’s unexpired store leases and one for a distribution center.
“Critically, pursuant to the sale transaction, the purchaser has committed to extend employment to substantially all store employees at the acquired stores as well as a significant number of employees at the debtors’ headquarters,” according to court documents.
The sale is subject to approval by the courts in the United States and Canada, as well as other customary closing conditions.
The proposed transaction will “maximize the value of our company for all our stakeholders,” Claire’s CEO Chris Cramer said in a statement.
Several retail chains unwound their operations and closed all their stores this year after seeking bankruptcy protection for a second time, including Joann and Party City. When Claire’s filed for Chapter 11 this month, it said it might be forced to liquidate if it couldn’t find a buyer.
For the record
Kirkland & Ellis is serving as legal counsel, Houlihan Lokey is serving as investment banker, and Alvarez & Marsal is serving as restructuring adviser to Claire’s. Osler, Hoskin & Harcourt is serving as Canadian legal counsel to Claire’s. Paul Hastings is serving as legal counsel to Ames Watson.