Claire's has filed for bankruptcy, as the hub for ear piercings at malls across the U.S. is the latest retailer to succumb to its massive pile of debt.
Claire's, which says it has pierced more than 100 million ears around the world, reached a restructuring agreement with its creditors. In a Chapter 11 bankruptcy filing on Monday, Claire's said it will reduce its debt by $1.9 billion. It held $2.1 billion in debt at the end of 2017.
The company will continue to operate its approximately 1,600 Claire's and Icing brand stores in the United States during the bankruptcy process and expects to complete it by September. International stores are not part of the restructuring agreement.
"This transaction substantially reduces the debt on our balance sheet," Claire's CEO Ron Marshall said in a statement. "We will complete this process as a healthier, more profitable company." Marshall came from now-defunct bookstore chain Borders.
Claire's struggles stem from a deal it struck more than a decade ago that left it burdened with debt.
In 2007, Apollo Management, a private equity firm, bought Claire's for $3.1 billion and took the company private in what's known as a leveraged buyout.
Claire's could never escape its debt load. As traffic slowed to its brick-and-mortar stores, shoppers moved to digital channels and fast fashion chains such as H&M, Zara and Forever 21 chipped away at sales.
Claire's joins a long line of retailers that have filed for bankruptcy in recent years, including Toys "R" Us, Payless Shoes, Gymboree, Rue21, The Limited and RadioShack.
Toys "R" Us, another company left deep in debt from a leveraged buyout, said last week that it was liquidating its 735 stores in the United States.
Claire's believes a lighter balance sheet will help it avoid Toys "R" Us' fate and still remain a "Girl's Best Friend." And the company says its business is Amazon-proof because you can't pierce your ears online.