Teen retailer Claire’s Stores needs a big sales lift from back-to-school or the business will likely go bankrupt, The Post has learned.
“The situation depends on the real cash flow in the next couple of months,” a source with direct knowledge of the situation said. “You have to think more likely than not it will result in bankruptcy.”
For the accessories retailer, with nearly 3,000 stores and loaded with so much debt that sucks every penny of profit off its books, a lot of fashionable jewelry and accessories will have to be sold.
Back-to-school is the chain’s second-busiest time of the year next to the holiday season, said Claire’s former Vice Chair Marla Schaefer, whose family founded the business and sold it to Apollo Global Management in 2007.
Apollo then loaded it with debt.
Now Claire’s is discounting to move product. A Katy Perry Black Cat Train Case that was $14.49 is now $7. Katy Perry Prism Stud Earrings that were $9.99 are now $1.
Claire’s owes lenders $2.4 billion. In the six months ended June 30, it projects generating $72 million in profits — but owes $110 million in interest.
Same-store sales in the 10 weeks ended July 10 are down 5.9 percent from last year. Creditors are discussing how to carve up the company in a bankruptcy, sources said.
“This is still an emerging situation, and no one knows how it will turn out,” the source said.
Schaefer believes some of the blame falls to Apollo, which she contends does not understand specialty retail.
“When I owned the company, it was a real gem,” she said. Apollo declined to comment.