Claire’s Stores Inc. intends to expand on its concession program, currently in place in 130 Toys ‘R’ Us stores, as it looks to use a combination of shops-in-shop and e-commerce to lessen the effects of poor mall traffic.
Claire’s currently has 116 concessions in Toys ‘R’ Us stores in Europe and 14 in the retailer’s North American stores.
Those departments “continue to exceed our expectations,” said Beatrice Lafon, chief executive officer of the youth-oriented jewelry and accessories retailer.
“We plan to open about 450 more concessions in 2015 and plan to continue to expand this program in the months and years ahead,” she added. “Our success in this area allows us to mitigate continuing declining mall traffic.”
Pressed on the program during a Wednesday morning conference call to discuss fourth-quarter results, Lafon said Claire’s is conducting tests of the departmental shop concept with seven additional partners “and in conversations with a few more in addition to that, and we expect some of these, if not all of these, tests to work.”
Claire’s had 20 concessions in place at the end of 2013.
A second channel initiative is the expansion of e-commerce and mobile commerce that “enable us to communicate with our customers in real time.” E-commerce is in place in 155 countries, the ceo said, and a click-and-collect service has been instituted in Europe.
Claire’s weathered a “challenging” fourth quarter, Lafon said, as it battled a variety of adverse factors, from the West Coast port slowdown and weak traffic in malls to unfavorable currency translation and a soft jewelry market.
Including impairment charges of $128.2 million and other special items in the three months ended Jan. 31, the Hoffman Estates, Ill.-based retailer posted a net loss of $122 million against net income of $7.4 million in the fourth quarter of 2013. Adjusted earnings before interest, taxes, depreciation and amortization fell 11.6 percent to $84.7 million from $95.7 million.
Sales dropped 5.3 percent in the quarter, to $412.4 million from $435.5 million, and were off 1.5 percent at constant currency. Same-store sales were down 2.3 percent as they declined 1.5 percent in North America and, measured in local currency, descended 3.8 percent in Europe. Gross margin dropped to 49.8 percent of sales from 51.4 percent as merchandise margin declined.
For the full year, the net loss, including impairment, grew to $207.6 million from a loss of $65.3 million in fiscal 2013, while revenues dropped 1.3 percent to $1.49 billion.
Lafon said the strongest franchise among its younger customers derived from its license for the film “Frozen.” She said it was its number-one license in all markets but Portugal.
Claire’s was acquired for $3.1 billion by Apollo Management in 2007 and then taken private.