News Column

Claire's reveals new plan to right sluggish sales

August 29, 2014

By Alexia Elejalde-Ruiz, Chicago Tribune



Aug. 29--With a new CEO at its helm, struggling teen accessories retailer Claire's plans to test new channels, including wholesaling to mass merchandise stores and opening Claire's-branded spaces in some Toys 'R' Us stores in North America, the company said during an earnings call Thursday.

After several quarters of lackluster financial performance, Hoffman Estates-based Claire's was able to stem its losses for the three-month period that ended Aug. 2.

The company lost $20.6 million in the quarter, about the same as a year ago.

Sales at stores open at least a year, a key metric of retail health, fell 2.9 percent at its North American stores. Its European stores fared better, with same-store sales up 2.5 percent.

"North American markets are the most challenging from a traffic point of view," said CEO Beatrice Lafon, who took the helm of the company in April after the abrupt resignation of then-CEO James Fielding. Lafon previously was president of Claire's Europe.

Revenue rose 3 percent to $377.8 million, thanks to better sales at new stores, increased shipments to franchisees and a boost from foreign exchange.

Lafon announced plans for "product innovation and channel extension" as well as efforts make Claire's, founded in 1961 and well known by many girls as the place for free ear piercing, "cool and front of mind."

The company plans to expand its relationship with Toys 'R' Us in Europe, which it began 18 months ago, and pilot a similar program in North America in the current quarter. Claire's has dedicated branded spaces in Toys 'R' Us stores across Europe that are operated and managed by Toys 'R' Us, though Claire's owns the stock.

Claire's also plans to look at opportunities to sell its wares to other stores outside of malls, where traffic is waning. Most of Claire's stores are currently located in malls.

Claire's expects to close 130 to 140 underperformng stores in the current fiscal year and open 40 new stores.

Claire's said it is also investing in e-commerce, social media and special events and launching exclusive licensed products from such brands as Frozen and up-and-coming boy bands The Vamps and 5 Seconds of Summer. For the critical holiday shopping season, Lafon said Claire's will have the widest assortment of gifts in years.

As of Aug. 2, Claire's has 3,052 company-operated stores, 1,880 of them in North America and 1,172 of them in Europe. It also has 436 franchise stores.

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(c)2014 the Chicago Tribune

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Source: Chicago Tribune (IL)


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