The Latest Bezos Casualty: Claire's To File For Bankruptcy

First Toys "R" Us getting ready to liquidate, and now that other famous pre-crisis retail LBO, Claire’s Stores, the tween fashion accessories mecca where "legions of preteens got their ears pierced", is preparing to file for Chapter 11 in the coming weeks, Bloomberg reported.

The company, which was LBOed by Apollo in 2007, is set to hand over equity control from Apollo to key creditors including Elliott Capital and Monarch, with Bloomberg noting that Venor and Diameter Capital Partners are also involved. The move should help ease the $2 billion debt load at Claire’s, although just like with Toys, it may merely be delaying the inevitable liquidation (it took Toys less than 6 months to go from Chapter 11 to 7).

That said, Claire's bankruptcy is hardly a surprise: the mall anchor retailer was prominently featured in our November piece, "A Look At America's Retail Apocalypse In Charts" in which we highlighted the firm for its massive debt load and upcoming debt maturities. Sure enough, Bloomberg does the same:

The current debt load is more than 10 times a key measure of its annual earnings, the result of its 2007 leveraged buyout by Apollo. More than $1.4 billion of its debt matures next year, and more immediate pressure comes from a $60 million interest payment that’s due March 13.

And since the company no longer hopes to continue as a going concern, it is guaranteed that it will filed Chapter 11 within the 30 day grace period following the March 13 coupon payment which will not be made.

Meanwhile, score another slam dunk victory for Apollo, a firm that leads the league tables in the number of "LBO-to-Default" transformations. When Apollo paid $3.1 billion to acquire Claire’s from the family of founder Rowland Schaefer in 2007, it then began expanding rapidly, adding on even more debt. It added about 350 stores between 2010 and 2013, with more than 2,700 globally by the time it filed plans that year to go public, according to a company document.

But, as Bloomberg notes, the chain struggled to remain profitable after the Apollo buyout, and Claire’s withdrew its initial public offering registration in early 2017. And, about a year later, appropriately enough it is filing for bankruptcy.

Finally, while the company's bankruptcy was a long foregone conclusion, a key outstanding question is what will happen to the cash flow of all those malls where Claire's is an anchor client. According to Claire's 10K, its stores in North America are located primarily in shopping malls and average approximately 1,000 square feet of selling space. It has 1,600 stores in North America, which means 1,600 malls are about to see their cash flow drop that much more, which begs the question: is the "go long the malls" trade, which briefly became cool among the counter-contrarian crowd, already over, and is time to resume shorting the CMBX BBB-.

Meanwhile, back in Seattle, Bezos takes another victory lap on his road to intergalactic domination.



Laowei Gweilo Banana Republican Thu, 03/08/2018 - 19:14 Permalink

is this one really Amazon's doing?

or is it more than Tweens these days prefer their smartphones to playing dress-up with cheap Chinese-made lead-poisoning jewelry.

Amazon is killing off many retailers, but Claire's, Toys 'R Us, and Sears killed themselves. cuz there are retailers (at least in Canada) like The Bay or Nordstrom that are doing just fine and packed with hundreds of people even on the most random of Thursdays o.0 i mean, fuck, you should have seen Holt Renfrew's every weekend this winter. they must have sold 100 Canada Goose jackets a day.

There's still value in physical space as long as it's for shit that has actual value being bought in person... like a high quality winter coat, or a truck. I don't need to buy $10 made in china shit in person. 

In reply to by Banana Republican

NumbersUsa Laowei Gweilo Thu, 03/08/2018 - 20:25 Permalink






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In reply to by Laowei Gweilo

Retired Guy NumbersUsa Fri, 03/09/2018 - 00:37 Permalink

Dude! I don't want to see your book ad over and over. Go and spam no more.

You don't need a bad guy to explain this chapter 11. The article says 350 new stores and a ton of debt was added by the LBO artists. I have noticed at the same time lots of quiet, empty malls. People would rather fiddle with their smart phones than go out to buy doodads. The LBO artists were doing the wrong thing at the wrong time. The market changes. Those in the way are crushed.

In reply to by NumbersUsa

NumbersUsa Retired Guy Fri, 03/09/2018 - 00:52 Permalink

not my book ad, just exercising my free speech, but maybe you don't like free speech unless it's what you have to say or what you agree with.

We have nothing to gain in any way except that people could be made aware of the True history that has been withheld from them by the jew supremacists that control the major publishing houses and if you self publish they persecute you and fire bomb your house, and murder you by bombing your vehicle, but maybe that's okay with you.

In reply to by Retired Guy

Fed-up with be… Laowei Gweilo Fri, 03/09/2018 - 03:07 Permalink

I can agree with this.   My wife and I sold our only pickup after selling our home.  We ordered a new Mattress From Sears that promised us home delivery and then they backed out of the deal and no matter where I complained, NO ONE would listen.   They simply would not do it.  So, we canceled the order.  They came after me with more gusto than they showed in making us happy customers.  In other words, they are a shit company deserves to die.  We ordered a BED IN A BOX and it was better than the Sears model.

In reply to by Laowei Gweilo

icedoc RedBaron616 Thu, 03/08/2018 - 19:35 Permalink

I agree. Amazon is the target communist in today's economic Cold War; they get blamed for any bad news. Yet is there is so much profit being skimmed from bankrupt stores, why isn't Amazon just rolling in earnings?


I would like to see a comparison chart of debt ratios for the bankrupt retailers; that would likely tell where all the value went. I know that's what happened to Sear's; vampire management sucked all the real estate value from shareholders and left them holding the bag.

In reply to by RedBaron616

NumbersUsa icedoc Thu, 03/08/2018 - 20:22 Permalink

"On November 21, 1962, the Department of Justice ordered the AZC (AIPAC) to begin registering as an Israeli foreign agent. This touched off an intense battle between the Justice Department and the AZC which outlasted (killed) both JFK and RFK. The bloodied and bruised Justice Department hid away its files on the affair until they were finally declassified and released in 2008.

The effort to register Israel’s foreign agents clearly failed. Just 42 days after the Justice Department order, the American Israel Public Affairs Committee incorporated itself in Washington and took over the AZC’s functions. Since the year it was ordered to register—as part of the AZC—AIPAC has extracted an inflation-adjusted $250 billion from US taxpayers for its foreign principals. Influencing the conduct of US policy "by techniques outside normal diplomatic channels" has never stopped."

And the jew supremacists at AIPAC want your guns, your money, your kids & your soul.

In reply to by icedoc

ted41776 Thu, 03/08/2018 - 18:43 Permalink

existing anti-trust laws were passed to break up companies that were much smaller than google, facebook, and amazon


you know what's going to happen if people start asking for this to get "fixed", right? since existing laws mean nothing, a new law will need to be passed that adds a new "don't rape me bruh" surcharge to all online transactions. a percentage of the surcharge will go directly to the politicians who pass it and some of it will go towards pr of how great the new law is and how much life sucked without it. the remainder will go directly to the rapists to make sure rapes are conducted in a transparent, fair, consistent, and inclusive manner and that no one but them is able to do it legally. so don't bitch too much about being raped to the people who are raping you, or they might end up raping you even more. do i need to remind you of the "affordable" "care" act? if you didn't already, now you know how our political, economic, and legal system works / the more you know psa

Endgame Napoleon HRH of Aquitaine 2.0 Thu, 03/08/2018 - 19:03 Permalink

H**, my late middle-aged *** bought my hair accessories there in my late teens and early twenties. Since my generation, the Xers, are much smaller in number than the Millennials, I find Claire’s demise strange, especially since their items are not high-priced. Maybe, the big-box retailers just started showing up on every corner, duplicating Claire’s offerings, and out of convenience, people just started buying accessories there (all in one place). Online retail still only has 12% of the market, but maybe, the margins are small in accessories. Hard to believe. Accessories cannot be that expensive to make—labor-wise or material-wise.

In reply to by HRH of Aquitaine 2.0

Let it Go Thu, 03/08/2018 - 18:55 Permalink

Two weeks ago it was Amazon is expanding into delivery with “Shipping with Amazon,” or SWA. Then it was about how Amazon was going full tilt into the grocery business, a sector that has always been challenging. The other day it was banking or better yet "checking" which does not normally create huge profits. So again I ask, how does Amazon merit such a high stock valuation?

The idea Amazon is entering into this part of the business world should force any logical investor to question why their stock is trading at a PE 300 time future earnings. It is insane to think any "delivery company" can ever be worth such a high multiple. More on this bad idea in the article below.

http://Amazon To Compete With UPS And FedEx, Seriously?.html

RedBaron616 Thu, 03/08/2018 - 19:05 Permalink

This is another BS article. The problem is that the company was loaded up with debt. It had NOTHING to do with Amazon, but apparently authors must be secretly paid by Amazon to mention them in each and every retail story, whether relevant or not.

Jeepers Creepers Thu, 03/08/2018 - 19:17 Permalink

The world would be a better place without Amazon.


I know some of these stores are shit but when everything goes under and all commerce goes through Amazon, don't expect those low, low prices.

rickv404 Thu, 03/08/2018 - 19:35 Permalink

BS. We're living in a declining economy, brought on by trillions of inflation financed spending, under the last two presidents. Much of that spending is permanent and will grow over time, particularly Obamacare. People can afford less, so they're spending less, businesses are thus closing. Bezos is by no means the main culprit and so what if he were? People are getting an advantage to their pocketbook they aren't getting from traditional retail. You want businesses to flourish? Downsize the thing that's increasingly burdening it - government. 

marsrecords Thu, 03/08/2018 - 20:01 Permalink

This so #^%*(&( funny.

ZH is getting more BS articles these days.

Bezos had nothing to do with it. These junk companies were created to extract the maximum amount of revenue from the dummies. 

They are projects in themselves. Every project has a begin date, end date, budget and product. The product is "extracting money from dumb asses". They were designed to do this.

You have heard of pump-n-dump stocks?

The garbage companies are pump-n-dump companies.

The people getting screwed are the "stupid money" investors, not the big boy insiders.

1) IPO garbage companies that are all flash-n-cash. No business model. Impossible to maintain long term. But pumped up by the

2) Let 'em run for a few years to make it look good. The big boys cash out slowly while the rubes cash in.

3) When the stupid money is in and the internal models start to show cracks, make sure your buddies are out and pull the

4) Then if they are smart, they Chapter 11 so that they can extend the pain and allow their vulture capital buddies and
lawyers to grab a few hundred million more in fees before calling it quits.

5) Rinse and repeat.

Insiders always sell at the top. Rubes sell at the bottom.

It always works and no one questions it because they all make so much money from the work flow.

The market actually exists to do this. It prevents the upper middle class and the affluent from accumulating wealth long term. It prevents their being able to escape the system. 

Blaming Bezos for moron investors is a laugh. I didn't hear anyone trying to help Bezos when he was burning through billions in INTEL spook money building huge cloud networks at the same time building up the Amazon brand. Everyone just laughed at him hoping he was going out of business. Now they piss and cry because he is a success. 

kareninca Thu, 03/08/2018 - 20:24 Permalink

My grandmother pierced her own ears at home with a sterilized threaded needle and a potato  -  well, a friend did it for her.  It worked fine.  I had mine pierced in the late 70s in a mall in rural New England, and then a decade later found myself wondering if had thereby been exposed to some dread disease  -  as it happens I hadn't but really mall piercings are not often done safely.

Maybe this generation of kids has the brains to use a potato at home with their own germs.

NumbersUsa Thu, 03/08/2018 - 20:26 Permalink






The Truth NEVER Taught About World War 2, The Truth the jew supremacists don't want you to know !!

2nd Edition (expanded post-ban)

For Anyone & Everyone interested in The Truth regarding jew war II, Packed full of Facts, 600 Illustrations, Maps, Documents, News Articles, Headlines, Back Door Agreements hid From the Public, The Propaganda exposed, the goods on Churchill & Roosevelt, & On & On....

roddy6667 Thu, 03/08/2018 - 22:00 Permalink

When I worked in a mall, we were near a Claire's, and I saw they were always busy. They had a good business model. They buy trinkets by the container full for a couple of pennies in India and sell it for $8 in the American mall. The customers are girls under 12. It's easier for a parent or grandparent to buy them an $8 doodad than listen to them complain. How can you lose money with that markup and ease of selling? Somehow, somebody mismanaged the business terribly and screwed it all up. No doubt greed was a big factor.