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Dive Brief:
Claire’s has paused store closures in light of a deal, announced Wednesday, to sell its North America operations. The retailer had plans to shutter 700 stores and was mulling liquidation of its entire 1,500-store footprint in North America.
An affiliate of private equity firm Ames Watson has agreed to acquire the tween accessories retailer, including its intellectual property, for $104 million in cash plus a $36 million seller note, per court documents.
The firm will also assume certain liabilities, including cure costs, and pay some rent and wages for “a significant number of [Claire’s] employees.” Claire’s filed for bankruptcy earlier this month.
Dive Insight:
This deal will come as a surprise to some, given how Claire’s struggled for months to find a buyer, before and after heading back to bankruptcy court this month. The retailer previously filed under Chapter 11 in 2018.
“The Debtors left no stone unturned in their sale and marketing process,” the company told the court Wednesday, noting that it had “entered chapter 11 with multiple letters of intent and worked tirelessly with these counterparties since the Petition Date to convert the letters of intent into binding bids and, ultimately, an asset purchase agreement.”
Claire’s reached out to 160 potential financial and strategic firms and executed more than 60 non-disclosure agreements, per court documents.
“That effort was a success,” the company also said, and urged the court’s approval.
The development changes a lot. A couple of weeks ago, Claire’s initiated plans to close 700 locations, including all Walmart shop-in-shops and Icing stores, and warned that its entire fleet in the U.S. and Canada could ultimately shutter. With Ames Watson’s agreement to acquire at least 795 Claire’s stores in North America — and potentially as many as 950 — nearly all store employees plus many at the retailer’s headquarters will keep their jobs, per court documents.
The deal — which comes with a “fiduciary out” if Claire’s gets a better offer — also allows the retailer to fully pay down its asset-based loan, per court documents.
Ames Watson co-founder Lawrence Berger in a statement called Claire’s an “iconic brand.” The private equity firm also owns or has invested in Lids, Champion, South Moon Under and Fanatics, among other brands.
“Claire’s has built a powerful emotional connection with generations of consumers through its focus on self-expression, creativity, and accessible fashion,” he said. “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.”
The sale is subject to approval by courts in the U.S. and Canada and customary closing conditions.