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Claire’s Q3 Profits Fall 48%

Sales rose 2.2 percent due to new store sales.

Teen accessories and jewelry chain Claire’s Stores Inc said it saw profits decline in the third quarter.

For the three months ended Oct. 29, income dropped 48 percent to $1.9 million from $3.6 million last year. Interest expense in the quarter rose 17.3 percent to $43.5 million from $37.1 million. Sales rose 2.2 percent to $356 million from $348.2 million, but consolidated same-store sales fell 2.2 percent. By operation, same-store sales inched up 0.8 percent in North America and fell 7.1 percent in Europe.

The company said fourth-quarter consolidated quarter-to-date same-store sales performance is slightly negative, driven down primarily by its European business.

Gene Kahn, chief executive officer, said, “While we are clearly disappointed with our same-store sales performance in both operating divisions during the third quarter, we believe we have identified the contributing factors and developed the actions we need to take to improve near-term and future performance. Our global team is dedicated to delivering the best possible result and I am confident in their ability to achieve our objectives.”

The company said its revolving credit facility continues to remain “undrawn following the March 2011 paydown from the proceeds of the Senior Secured Second Lien Notes. In addition during the fiscal 2011 third quarter, the company paid $26.2 million to retire $27.8 million of Senior Toggle Notes and $2.7 million of Senior Notes.”

Claire’s operates through two store concepts: Claire’s globally and Icing in North America.

In May 2007, Claire’s was sold to private equity firm Apollo Management.