Claire's Stores losses deepen as Chapter 11 restructuring kicks off
Struggling American accessories retailer and tween favorite Claire’s Stores, Inc. reported on Wednesday slipping European same-store sales in the first quarter of 2018, combined with increased losses, dragged down by restructuring costs related to the retailer’s filing for Chapter 11 bankruptcy.
Net sales for the first quarter ended May 5, 2018 totaled $311.0 million, an increase of $11.4 million, or 3.8%, compared to the $299.6 million reported in Q1 2017. This rise was, however, due in large part to the positive effect of favorable foreign currency conversion rates, without which net sales would have fallen 1% over the period, reflecting increases in sales at the company’s new concessions and company-operated stores, offset by store closures and decreasing same-store sales.
Indeed, while same-store sales in North America rose 5.4% in Q1, overall consolidated same-store sales fell 0.4%, dragged down by a decrease of 9.9% in Europe.
Claire’s Stores filed for Chapter 11 bankruptcy on March 19, 2018 and work is currently underway to eliminate a large portion of the company’s considerable debt, a process which implied some $10 million in restructuring expenses over the course of the first quarter and affected the retailer’s results for the period accordingly.
This combined with $25 million in interest expenses meant that while the company’s operating income totaled over $20 million in the quarter, its net loss for the period came to $11.6 million, compared to a loss of $6.8 million in Q1 2017.
As of May 5, 2018, Claire’s is present in a total of 3,248 company-operated stores and franchise locations in North America and Europe, compared to 3,316 stores at the end of fiscal 2017. The company did, however, add thousands of new concessions stores in Q1 and currently operates 5,230, compared to 970 concessions at the beginning of the quarter.
Claire's Stores intends to continue business as usual in its retail locations during the restructuring process.
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