Claire’s, a beloved mall staple for generations of tweens, is teetering on the edge of collapse with its second bankruptcy filing in less than a decade.
According to the Daily Mail, this Chicago-based retailer, operating 1,300 stores and known for ear piercings and affordable accessories, has filed for Chapter 11 bankruptcy again after a prior filing in 2018, grappling with missed rent payments, looming debt, and punishing import tariffs.
Founded in 1961, Claire’s carved out a niche as a rite of passage for middle schoolers. Its stores brim with glittery earrings, necklaces, rings, keychains, and hats—most priced under $10. For many, it’s the go-to spot for friendship bracelets and first piercings.
But beneath the sparkle, financial cracks have widened. By June and July, Claire’s failed to pay rent on some stores, signaling deeper distress. Executives now face nearly $500 million in loans due by the end of 2026.
To preserve cash, top bosses, with input from a restructuring team, skipped interest payments. This desperate move highlights the severity of their cash crunch. Meanwhile, the company has been hunting for a buyer since late June.
Claire’s woes aren’t just internal—they’re tied to broader economic policies. Relying on inexpensive imports from China to keep prices low, the retailer faces a "30% tariff" on these goods due to trade policies from the Trump era. These import taxes threaten the very pricing model that made Claire’s a mall favorite.
Adding to the uncertainty, import taxes could climb higher depending on U.S.-China trade talks. For a chain built on cheap accessories, this is a direct hit to profitability. Claire’s ability to stay competitive hangs in the balance.
Bankruptcy isn’t new territory for Claire’s, having emerged from Chapter 11 in 2018. But as Sarah Foss, global head of bankruptcy at Debtwire, notes, “Bankruptcy can be a good option for a struggling retail chain, allowing it to refocus, trim its debt, and slim down its retail footprint.”
Yet, Foss warns of a darker trend. “However, retailers that have emerged from Chapter 11 only to file again a few years later often find themselves liquidating and shutting their doors entirely, with some kind of online presence remaining.”
Foss also points to Claire’s core customers as a challenge. “This demographic is notoriously fickle and heavily influenced by the trends they are seeing online,” she said. Adapting to rapid shifts in tween tastes is no small feat.
Claire’s isn’t alone in its struggles—other retail chains like Forever 21, Joann, Party City, and Rue 21 have also filed for a second Chapter 11 in the past two years. Tragically, all four shuttered their brick-and-mortar stores, closing hundreds of locations nationwide.
Retail expert Neil Saunders explains the broader carnage. “Clothing retailers have been battered by the rise of Shein and, to a certain extent, Temu,” he said. These e-commerce giants are outpacing traditional stores with speed and price.
Saunders also highlights mall-based competition. “They’ve also faced competition from other mall players like Zara, Uniqlo, and others,” he noted. The bar for fast fashion is higher than ever, and many legacy chains can’t keep up.
For investors and financially savvy readers, Claire’s story is a cautionary tale about the retail sector’s fragility. Government-imposed tariffs and market distortions can crush even iconic brands—free-market competition isn’t always the culprit. Consider diversifying portfolios away from heavily tariff-exposed retailers and into more resilient sectors.