Claire’s struggles on through restructuring process
Currently in the midst of Chapter 11 bankruptcy proceedings, American accessories retailer Claire’s Stores, Inc. is battling on, managing to reduce its net loss in the second quarter as the positive effects of restructuring begin to take effect.
The company’s net sales for Q2 2018 totaled $314.4 million, down 0.7% from the $316.6 million reported in the prior-year period. This decline was mainly due to store closures, with the company’s global store count having dropped from 3,316 to 3,158 over the quarter as it attempts to streamline its retail network. The decrease was partially offset by an increase in new and same-store company-operated store sales, as well as rising franchisee sales.
Consolidated same-store sales for the period increased 0.1%, as a 4.4% rise at the tween favorite’s US stores was dragged down by a 6.3% decline in Europe.
This progress – albeit faltering – combined with the positive effects of the restructuring process meant that Claire’s was able to reduce its net loss from $20.49 million in Q2 2017 to $3.29 million in the second quarter ended August 4, 2018.
Claire’s Stores applied for Chapter 11 bankruptcy in March of this year and work has since been undertaken to eliminate a large portion of the retail chain’s considerable debt. Last month, Oaktree Capital Management, the largest holder of the company’s second-lien debt, was accused of breaking creditor agreements by continuously contesting Claire’s restructuring agreement and opposing its attempts to exit bankruptcy in September.
The accusations followed Oaktree’s announcement that it was attempting to raise $1.5 billion to fund a bid for Claire’s which would go up against a $1.4 billion offer previously made by the retailer’s senior lenders, including Elliott Capital Management and Apollo Global Management.
For the first six months of fiscal 2018, Claire’s reported net sales of $625.5 million, up from $616.3 million in the prior-year period, while net loss reduced from $27.2 million to $14.9 million.
The accessories chain plans to carry on business as usual in its retail locations throughout the restructuring process.
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