Claire's, a childhood love that's gone under. - Blog 4

Claire's growing up was every little girl's fantasy. It was full of pink, glitter, accessories, items to go along with some of our favorite movies, and so on and so forth. What also made this store oh so wonderful was it's cheap items, so we could spend all of our spare cash in this store, especially when they would have their 10 items for $5 sales, in which you could find so many treasures. As the years have passes, Claire's Store Inc. has found them greatly endangered in the retailing world, which caused them to be bought out by Apollo Management LP in 2007

for $3.1 billion and had $245 million in cash on hand when the deal was announced. As of Nov. 1, it had long term debt of $2.3 billion. They also had to worry about how their sales in the third quarter had continued to fall. (Verdon)

How could this have happened? One factor is the global retail environment we've found ourself in this current economic recession, no one's wanting to buy. People are wanting to spend money on the essentials, which is why superfluous stores such as Claire's are the first to close, which would make sense as we see stores that have catered to this young teen/tween market, i.e. Club Libby Lu, are filing for bankruptcy as well. (Lynch) Another factor I believe that attributed to this loss was its inability to handle the financial aspects as well as they created a market for cheap fashionable finds. They found themselves in a corner with being so focused on creating the best deal for its customer they lost sight of being able to properly handle the operations of a company. (Verdon) One major thing that also lead to this occurring was when the company was bought out, it went from being a private company to a public company, meaning that a lot of debt was acquired in the transition. Normally you can count on sales to make up the difference in this situation, yet the market is having one of the worst periods in years, so Claire's continued to find itself asunder. (Verdon) It seems to me that ultimately Claire's lack of organization was the beginning of their downfall to their bankruptcy. Without a properly organized structure, they weren't able to adequately deal with all of its problems, which was seen in its good retail strategy and specific market they targeted that failed in its financial strategy. My 11 year old self at heart hopes they are able to turn this around, because this store has created many memories for people such as myself for getting my ears pierced there and finding earrings for the dance and so on, but the outlook isn't good at all.

Lynch, M. (2008, Dec. 5) Claire's loss Deepens on Comp Softness. Women's Wear Daily, 196(118), p. 17, 1p. Retrieved from Business Source Premier database.

iStockAnalyst. (2009). White Elephant; Linens 'N Things Failure an Example of Private Equity's Bad Bet on Retail. Retrieved Mar. 5, 2009, from http:///www.istockanalyst.com/article/viewiStockNews/articleid/2986138