Claire's sells North American business for $104M; about 800 stores to stay open
Claire's has found its white knight.
The tween and teen accessories retailer, which filed for Chapter 11 in August for the second time in seven years, has entered into an agreement to sell a "significant" portion of its North American business operations to an affiliate of private equity firm Ames Watson for $104 million in cash and a $36 million seller note, according to court documents. The deal comes a couple of weeks after Claire's warned it could liquidate its North American operations if it didn't find a buyer.
Under the terms of the deal, Ames Watson will acquire Claire's IP and operate Claire’s business across North America. This includes the continued operation of a minimum of 795 stores that could rise to 950 stores, reported WWD.
"We are committed to investing in its future by preserving a significant retail footprint across North America, working closely with the Claire's team to ensure a seamless transition and creating a renewed path to growth based on our deep experience working with consumer brands," said Lawrence Berger, co-founder of Ames Watson.
As part of the agreement, Claire's has paused the liquidation process at a large number of stores. For its other stores in North America, the liquidation process will continue..
Claire’s says the sale will “significantly benefit” the company's efforts to create value through its restructuring process. The deal is subject to approval by the Courts in the U.S. and Canada, and other customary closing conditions.
Brands owned or invested in by Ames Watson include Lids, South Moon Under, Mitchell & Ness, Ebbets Field Flannels, Zygo, Hungry and Margaux.
"As we continue through our restructuring proceedings, our team has worked tirelessly to explore every option for preserving the value of the Claire's business and brand," said Chris Cramer, CEO of Claire's. "We are glad to reach this definitive agreement to sell a portion of our North America operations to Ames Watson and maximize the value of our company for all our stakeholders. I would again like to extend my gratitude to every Claire's employee who has continued to show up for our customers during this challenging time for our business."
Claire’s currently operates approximately 1,350 store locations in the United States and U.S. territories, with the total including Claire’s, Icing and Walmart shop-in-shop locations. The retailer declared bankruptcy on Aug. 6 following increased competition from online budget retailers such as Temu and Shein, as well as newer brick-and-mortar players such as Studs and Lovisa.
In its filing, Claire’s estimated the total value of both its consolidated assets and liabilities as between $1 billion and $10 billion.
Advisors
Kirkland & Ellis LLP is serving as legal counsel to Claire's. Houlihan Lokey is serving as investment banker, and Alvarez & Marsal is serving as restructuring advisor. Osler, Hoskin & Harcourt LLP is serving as Canadian legal counsel to Claire's. Paul Hastings LLP is serving as legal counsel to Ames Watson.
