Chris Ratcliffe | Bloomberg | Getty Photographs
Tween retailer Claire’s is dealing with authorized challenges from a few of its Asia-based suppliers over tens of millions in unpaid money owed because it tries to emerge from a second chapter below new possession, in response to claims the suppliers filed in Hong Kong.
The conflict with distributors comes as personal fairness agency Ames Watson navigates its first vacation season as Claire’s new proprietor and works to make sure it has the correct merchandise in inventory after shopping for the mall retailer and about 1,000 of its shops out of chapter for $140 million in September.
Since buying Claire’s, Ames Watson has been attempting to rebuild what co-founder Lawrence Berger beforehand informed CNBC is a “damaged enterprise.” Its bid to get the corporate again to profitability will hinge partially on a profitable vacation season and its capability to inventory common merchandise transferring ahead.
The retailer’s sprawling provide chain, made up of longtime distributors geared up to deal with the rigorous security requirements governing kids’s merchandise, has lengthy been thought of the corporate’s “secret sauce,” former Claire’s CEO Ron Marshall informed CNBC. With out the help of these suppliers throughout its first chapter in 2018, the retailer’s vacation season would’ve been a “nightmare,” mentioned Marshall, who led the corporate from 2016 to 2019.
The dispute with suppliers provides one other problem for Ames Watson because it tries to repair the lengthy struggling retailer. Because the U.S. hits the ultimate days of peak procuring, Ames Watson mentioned “Claire’s has stock in place for the vacation season.”
A conflict over orders
Claire’s disputes with its suppliers in Asia encompass orders positioned within the months earlier than the retailer’s second chapter submitting in August, when it was nonetheless owned by hedge fund Elliott Administration and having monetary difficulties.
Claire’s ordering quantity for one provider had dropped by 79% in March and 76% in April in comparison with the prior 12 months, data reviewed by CNBC present. Then ordering ramped again as much as the corporate’s common cadence in Could and June, with quantity down solely 2% and three% in these months, respectively, in comparison with 2024, in response to the data.
On the time Claire’s elevated its orders once more, the corporate was working out of money, contemplating outright liquidation and in search of a purchaser to avoid wasting its enterprise, in response to a declaration Claire’s CEO Chris Cramer filed with the courtroom after the corporate filed for chapter.
Whereas the distributors, together with those that are actually pursuing authorized motion in opposition to the retailer, have been conscious the corporate was navigating monetary difficulties when the orders have been positioned, they anticipated to be paid as that they had been through the retailer’s first chapter submitting, mentioned the folks, who spoke on the situation of anonymity as a result of the discussions have been personal.
However by the point the distributors completed manufacturing the physique jewellery, nail polish and friendship bracelets Claire’s had ordered forward of the vacation procuring season, the retailer had filed for chapter safety and the distributors weren’t paid for some orders, the folks mentioned.
When Ames Watson acquired the corporate, among the distributors who have been owed cash agreed to maintain working with Claire’s with out getting paid for these money owed, involved they’d lose considered one of their largest purchasers and doubtlessly their enterprise, the folks mentioned. However others refused, and have taken authorized motion in opposition to Claire’s Hong Kong-based sourcing workplace RSI Worldwide, over tens of millions in unpaid money owed, in response to claims the suppliers filed within the native courtroom.
In the meantime, a couple of week after Ames Watson introduced it might purchase Claire’s out of chapter, RSI Worldwide filed a discover to switch its belongings to a brand new entity. The enterprise switch gave collectors 30 days to file a declare to recoup unpaid money owed, after which transferors aren’t accountable for the obligations below Hong Kong Legislation.
In a press release to CNBC, Ames Watson did not touch upon RSI Worldwide. It mentioned it was “not concerned within the operation or buying selections made previous to the acquisition.”
“Since then, we now have centered on responsibly stewarding the enterprise and interesting suppliers in good religion as we strengthen Claire’s for the long run,” the corporate mentioned. “We’re excited in regards to the firm’s course in 2026,” it added.
Hedge fund Elliott Administration, which owned Claire’s on the time the orders have been positioned, declined to remark.
The vacation stakes
On the core of Ames Watson’s technique to revive Claire’s is bettering its merchandise, which may turn into harder if the corporate has strained relationships with some suppliers. Compounding the issue is President Donald Trump’s sweeping tariffs, which have already strained retail provide chains globally and raised prices for importers.
Marshall, Claire’s former CEO, mentioned guaranteeing distributors in Asia bought paid through the firm’s first chapter was key to having the correct merchandise in place for the vacation season that 12 months.
“These have been suppliers the place we had generational relationships and in lots of circumstances, represented 30, 40, 50% or much more of their whole quantity, and the mental capital that represented was core to the success of Claire’s,” Marshall mentioned. “There is a distinction between having product on the cabinets, which we may have carried out, and having the correct product on the cabinets.”
He mentioned the disputes Claire’s is having with its suppliers may “disrupt the availability chain” each now and transferring ahead, making a turnaround harder.
“There must be recent, novel product to lure [customers] into the shop, and if you do not have that continuous replenishment of actually thrilling product, she’s gonna cross you by,” mentioned Marshall. “That is actually essentially the most fickle buyer on the earth: an 8-year-old lady.”
