Introduction to Claire’s Administration
The new owner of WH Smith’s High Street Empire, Modela Capital, and the redeemer of HMV, Doug Putman, are racing to secure the future of Claires, the accessories retailer that fell into administration last month, putting thousands of jobs at risk.
Background on Claire’s
Claires has been an integral part of British shopping centers and city centers for decades and is particularly popular with teenagers. The company has 278 British shops and 28 Irish businesses, employing around 2,150 people, making it one of the biggest high street chains to go into bankruptcy this year.
Bidding Process
Modela Capital made an offer to buy Claires from administrators Interpath in the past ten days. Doug Putman, who saved HMV in 2019, also submitted an offer. It is unclear which of the two is leading the race or if other parties are in discussions with Interpath.
Current Situation
The restructuring company said it would continue to trade all British and Irish shops while it explores options for the company. Before appointing administrators, Claires had carried out a sales process, but bidders, including turnaround specialist Hilco Capital, walked away from the auction.
Potential Outcomes
If Modela Capital acquires Claires in the UK, it would underline its status as the most prolific new investor in British retail. The company already owns the original factory business and Hobbycraft and has been linked to other high street assets. However, every buyer of Claires’ British business would likely close numerous shops, with a core estate of around 100 branches considered profitable.
Challenges Facing the Retail Industry
The retail industry has been hit by the chancellor’s employer national insurance increase, imposed last autumn. Both Poundland and River Island have recently survived creditor votes that saved them from slashing rents and closing dozens of shops.
Claires’ US Operations
The collapse of Claires’ British operations came a week after the US parent company filed for insolvency protection in Chapter 11. The company was owned by former creditor Elliott Management and Monarch Alternative Capital after an earlier financial restructuring. Since then, it has agreed to sell up to 950 of its US stores to Ames Watson, a private equity firm.
Future Prospects
Will Wright, British Managing Director at Interpath, said that Claires has long been a popular brand in Britain, known not only for its trend but also as a destination for ear piercing. The company will endeavor to operate all businesses as long as possible while exploring options, including researching the possibility of a sale that would secure a future for the popular brand.
