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Managing a business is challenging, even in the best circumstances. In today’s uncertain economy, marked by slowing consumer spending and shifting retail habits, it becomes even tougher.
For one retail chain, the difficulty has been compounded by years of financial strain, two Chapter 11 bankruptcies, and hundreds of store closures nationwide.
Once an iconic mall staple known for its affordable jewelry, colorful hair accessories, and quirky novelties, Claire’s is again facing serious financial setbacks. A new revelation has raised doubts about the long-term survival of the 64-year-old brand, which once played a significant role in the lives of countless teens and tweens.
As it works to emerge from its second bankruptcy under new ownership by the private equity firm Ames Watson, Claire’s is confronting additional pressures from its supply chain. Several Asian suppliers allege they are owed millions of dollars in unpaid debts, according to claims filed in Hong Kong and reported by CNBC.
The disputed orders were for holiday merchandise placed before Claire’s second bankruptcy filing, when Elliott Management still owned the company. Suppliers were reportedly aware of the retailer’s financial instability at the time the orders were made. However, by the time production was completed, Claire’s had already filed for bankruptcy.
After Ames Watson acquired the brand, some suppliers claimed they were still owed payment, but agreed to continue doing business with Claire’s. Others chose to pursue legal action against Claire’s Hong Kong-based sourcing office, RSI International.
As a major American retail chain, Claire’s is a prominent customer for many of these Asian suppliers. This is why, despite outstanding balances, several vendors continued to fulfill orders out of fear that refusing to do so could jeopardize their business relationship with the retailer.
During its latest acquisition process, RSI International notified creditors that they had 30 days to file claims to recover unpaid debts, liabilities that under Hong Kong Law do not transfer to new owners.
In a statement to CNBC, Ames Watson emphasized it was “not involved in the operation or purchasing decisions made prior to the acquisition.”
“Since then, we have focused on responsibly stewarding the business and engaging suppliers in good faith as we strengthen Claire’s for the long term,” said Ames Watson. “We are excited about the company’s direction in 2026.”
Claire’s first filed for Chapter 11 bankruptcy in 2018, emerging later that year under the new ownership of Elliott Management Corp. and Monarch Alternative Capital.
However, due to ongoing shifts in retail trends, intensified competition, slower consumer spending, and the continued rise of online shopping, the initial restructuring process wasn’t enough to prevent Claire’s from accumulating more debt.
In August 2025, Claire’s filed for Chapter 11 bankruptcy for the second time, reporting estimated assets and liabilities between $1 billion and $10 billion.
At the time of the filing, the retailer operated over 2,750 stores in 17 countries, with approximately 1,350 locations in the U.S., including Icing stores and Walmart shop-in-shops.
Following the second bankruptcy, Claire’s was acquired in September 2025 by Ames Watson in a nearly $140 million deal that included up to 950 stores. The firm assumed a significant portion of the retailer’s liabilities, including vendor and landlord debts, cure costs, and the continued employment of its staff, while providing $36 million in seller financing.
The acquisition appeared to halt mass store closures and allowed Claire’s to continue liquidation sales at select North American locations. At the time, the deal was seen as a turning point, with the retailer stating the move would help “Claire’s brand to remain a prominent retailer for teens, tweens, and young girls around the world.”
Despite the new ownership, a total of 291 stores were ultimately slated for closure, raising questions about the future of Claire’s North American footprint.
Holiday retail sales in November and December are expected to grow between 3.7% to 4.2% year over year, surpassing $1 trillion, according to the National Retail Federation (NRF).
Over the last five years, holiday spending has accounted for about 19% of total annual retail sales, primarily because higher sales volumes typically come without a significant increase in fixed operating costs.
Even amid ongoing economic uncertainty and rising inflation, consumers plan to spend an average of $890.49 per person this holiday season, the second-highest amount on record.
“The economy has continued to show surprising resilience in a year marked by trade uncertainty and persistent inflation,” said NRF Chief Economist Mark Mathews. “As tariffs have induced an uptick in consumer prices, retailers have tried to hold the line on prices given the uncertainty about trade policies.”
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While strong holiday sales could offer short-term relief, Claire’s long-term recovery remains uncertain. Strained supplier relationships threaten to disrupt the retailer’s supply chain, and the newly implemented U.S. tariffs under President Donald Trump add another layer of complexity.
Although tariffs on Chinese imported goods were originally much higher, the U.S. and China agreed to maintain a temporary 10% reciprocal tariff baseline through November 2026 as part of a truce. China also agreed to suspend its retaliatory tariffs from 2025.
“The latest one-year suspension is a positive sign. This supports our view that, despite ongoing de-risking efforts, a hard decoupling or trade embargo remains unlikely in the near term,” said J.P. Morgan Economist Tingting Ge.
“Both sides have shown willingness to compromise, but strategic competition will persist, with the possibility of further tit-for-tat actions and potential escalation or de-escalation during the upcoming truce period.”
For Claire’s, the holiday season may provide temporary relief, but unresolved supplier disputes, lingering debt, and broader economic pressures continue to cloud the retailer’s path forward.
Related: These luxury brands hold their value better than others
This story was originally published by TheStreet on Dec 23, 2025, where it first appeared in the Retail section. Add TheStreet as a Preferred Source by clicking here.
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