Privately held accessories retailer Claire’s Stores Inc. reported an increased net loss for the first quarter and an “overall softening” in current business conditions, particularly in Europe.


The company said that, while its comparable-store sales in North America have remained in positive territory, global comps in the second quarter are down in the low single digits, excluding any effect from translation of foreign currencies into dollars.


For the three months ended April 30, the Chicago-based retail firm reported a net loss of $19.6 million versus a net loss of $12.3 million in the year-ago quarter. EBITDA declined 2.9 percent to $42.7 million from $44 million, but adjusted EBITDA, stripping out a variety of special items, expanded 5.8 percent to $52 million from $49.2 million.


Sales grew 7.6 percent, to $346.4 million from $322.1 million, and rose 3.2 percent on a same-store basis, with North American comps up 4.8 percent but those in Europe up just 0.1 percent.


“Overall, the first-quarter business, while positive, reveals an overall softening,” said Gene Kahn, chief executive officer. “We are facing some headwinds and will need to work harder and smarter to sustain improved sales performance with commensurate EBITDA and cash flow.”


On the company conference call, Kahn noted “a challenging retail climate across all of Europe” because of “the macroeconomic environment, increases in VAT rates across many countries, increases in income taxes and other sovereign austerity measures, all of which have a negative impact on consumer sentiment.”


Later, in response to an analyst’s question, he said, “Europe is facing its challenges from a macroeconomic environment, but I think there is some pain associated with that in the short term.”


First-quarter gross margin declined to 50.5 percent of sales from 50.7 percent in the first quarter of 2010, with declines in merchandise margin due to higher markdowns and freight costs partially offset by a decline in occupancy costs.


The Chicago-based firm, acquired and taken private by Apollo Management LP in May 2007, finished the first quarter with $2.44 billion in long-term debt, 9.3 percent higher than at the end of last year’s fourth quarter. Cash and cash equivalents declined 12 percent to $246.1 million.

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