As forecast, girl's accessories retailer Claire’s Stores announced today that it has filed for Chapter 11 bankruptcy protection in U.S. bankruptcy court in Delaware. Claire’s, which is owned by private equity firm Apollo Global Management LLC , said it plans to emerge from Chapter 11 in September with more than $150 million of liquidity and to reduce its debt by about $1.9 billion, according to the statement. International subsidiaries of Claire’s are not part of the U.S. filings.
Total Retail's Take: Claire’s, which had over $1.3 billion in annual sales, joins several other U.S. retailers in bankruptcy as people increasingly shop online, shunning specialty brick-and-mortar stores. Walking Company Holdings Inc. and Bon-Ton Stores have also filed for bankruptcy this year. What was Claire's downfall? The death of malls. Like other chains with a heavy mall presence, Claire’s has had to contend with declining customer traffic and online competition. While it has worked to find new sources of revenue, including agreements to sell its accessories for pre-teen girls in CVS pharmacies and Giant Eagle supermarkets, its debt load was becoming just too heavy to handle. As as is common for retailers today, 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.