News Column

Claire's Stores loss widens in first quarter

May 22, 2014

By Corilyn Shropshire, Chicago Tribune

May 22--Teen retailer Claire's Stores Inc. said that its losses widened during the first quarter amid lackluster sales as it shutters stores and revamps its online offerings.

The Hoffman Estates-based teen retailer, which is mulling an initial public offering, lost $38.1 million in the quarter that ended May 3, compared with a loss of $26.5 million for the same period a year ago.

Revenue fell less than 1 percent to $353 million.

Sales for the quarter in stores open at least a year -- an important gauge of retailer health -- dropped 4.4 percent. A shopping mall fixture, Claire's is struggling with tight consumer budgets and increasing competition from the Internet and other bricks and mortar retailers. Claire's target market is young girls ages 10 to 14.

"While we have some great initiatives in place, overall the first quarter was disappointing," said CEO Beatrice Lafon,who was appointed last month after the surprise departure of CEO James Fielding.

In a conference call with analysts, Lafon said she would disclose more about the company's strategies during the second quarter earnings call later this year.

The company blamed the wider loss on the shutdown of their Chinese operations, a drop in sales in stores open at least a year and higher rent.

The company has seen some early success and increased spending in stores with its new Katy Perry accessories line that launched this month, Lafon said on a conference call.

But it's too early to analyze the results, she added. The market was particularly rough in the retailer's 1,881 North American stores, where sales in shops open at least a year dropped 5.5 percent. Their European market did a bit better, with sales dropping 2.4 percent in its 1,187 locations.

Company officials have not given a timeline for Claire's IPO. Now owned by private equity firm Apollo Global Management, Claire's shoulders $2.4 billion in debt.

As of May 3, Claire's operated a total of 3,497 stores.

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Source: Chicago Tribune (IL)

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