Claire's jewelry chain, with a dozen Long Island locations, files for bankruptcy again

Claire’s, the tween-focused jewelry retail chain with a dozen locations on Long Island, has filed for bankruptcy for the second time in seven years citing challenges from tariffs and lower spending at malls.

The Illinois-based retailer, known for its presence in American malls, filed for Chapter 11 bankruptcy in Delaware Wednesday morning. The privately owned company reported assets and liabilities each ranging between $1 billion and $10 billion, according to U.S. bankruptcy court filings. 

Claire’s CEO Chris Cramer said in a company announcement that the decision to file for bankruptcy was difficult but necessary.

“Increased competition, consumer spending trends and the ongoing shift away from brick-and-mortar retail, in combination with our current debt obligations and macroeconomic factors, necessitate this course of action," Cramer said in a statement. Court documents from the company also mention the recent impact of tariffs on the retailer.

"We remain in active discussions with potential strategic and financial partners and are committed to completing our review of strategic alternatives." 

The company has between 25,001 and 50,000 creditors, according to court documents. 

The retailer, which has more than 2,750 locations across 17 countries, according to its website, said in its bankruptcy announcement that its North American stores would remain open and serve shoppers as Claire’s continues to “explore all strategic alternatives.”

Officials with the company did not immediately respond to requests for comment on how many Long Island locations could be impacted. Claire's has locations Islandwide, including stores in Valley Stream, Levittown and Riverhead, according to the company's website.

“We remain committed to serving our customers and partnering with our vendors and landlords,” Cramer said.

Retail experts said the global chain has been financially struggling for years. 

“Claire’s has been struggling for many years so it’s not a surprise that it is filing again,” David Swartz, senior equity analyst at Morningstar said in a statement to Newsday. “Mall-based retailers have been in decline just as many malls themselves have been in decline.”

“The shopping habits of Claire’s core demographic have changed radically as they shop online and in specialty stores and do not shop in malls as much,” Swartz said. 

Retail analyst Neil Saunders said Claire’s bankruptcy is the result of longtime challenges related to the company’s overall debt and shrinking market relevance.

“The chain has been swamped by a cocktail of problems, both internal and external, that made it impossible to stay afloat,” Saunders said in an email to Newsday. 

Saunders, managing director of GlobalData, a Manhattan-based retail analysis firm, said the company became unable to pay its loans as debts became due.

"Most recently, tariffs have pushed costs higher, and Claire’s is not in a position to manage this effectively," he said. 

In court filings, Claire’s said the company “relies heavily on foreign suppliers,” and that it was significantly impacted by the implementation of tariffs starting in April.

Claire’s said the cumulative 145% tariffs on Chinese goods, as well as tariffs on Vietnamese and Thai goods, increased its cost of imported goods by an estimated $30 million, as of June 23.

The company filed for bankruptcy protection in 2018, citing lower customer traffic at shopping malls, where the retailer has a majority of its stores. During that bankruptcy, the company slated 92 stores for closure, none of which were on Long Island. 

Saunders said Claire's competition has only grown in recent years. Companies like Lovisa, which offers younger shoppers a “more sophisticated assortment” of jewelry and accessories at low prices have eaten into Claire’s customer base.

“There is likely a place for Claire’s, but it will need to use bankruptcy to slim down, shed debt, and shutter weaker stores,” Saunders said.