Claire’s emerges from bankruptcy
Illinois-based accessories retailer Claire’s Stores, Inc. announced on Friday that it has successfully completed its financial restructuring and exited from Chapter 11 bankruptcy, having eliminated around $1.9 billion in debt and gained access to $575 million in new capital.
Claire’s filed for Chapter 11 bankruptcy on March 19, 2018, and last month received court approval for its Third Amended Plan of Reorganization, which came into effect on Friday.
The plan was sponsored by an ad hoc group of the company’s first-lien creditors led by Elliott Management Corporation and Monarch Alternative Capital LP, but was initially opposed by the retailer’s biggest second-lien debt holder Oaktree Capital Management, which at one point announced that it was trying to raise funds in order to purchase Claire’s itself.
Following negotiations that allowed for up to 25% recovery of second-lien creditors, Oaktree has since voted in favor of the company’s current reorganization plan.
“We committed at the beginning of this process that we would emerge as a healthier, more profitable company – and that is exactly what we have done,” said Claire’s Stores CEO Ron Marshall in a release. “Our renewed financial strength cements Claire’s position as one of the world’s leading specialty retailers of fashionable jewelry, accessories and beauty products for young women, teens, tweens and girls, and with our key growth initiatives already delivering value, we are well-positioned for long-term growth and success.”
Over the last few months, the company has closed 189 stores but expanded its concessions network to cover 6,631 locations, an increase of almost 700%.
Store closures in the second quarter of 2018 contributed to a 0.7% decrease in the company’s net sales in the period, which totaled $314.4 million. Same-store sales, however, saw a slight increase of 0.1% and Claire’s was also able to reduce its net loss from the $20.49 million reported in Q2 2017 to $3.29 million.
The company carried on business as usual at its retail locations throughout the Chapter 11 process.
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