Claire’s Stores Inc. saw its third-quarter losses grow on reduced revenues as strength in accessories was insufficient to overcome weakness in jewelry.
The Chicago-based operator of Claire’s and Icing stores in North America and Europe reported a net loss of $26.8 million for the three months ended Nov. 1, higher than the $25.5 million loss registered in the third quarter of 2013. Adjusted earnings before interest, taxes, depreciation and amortization declined 7.2 percent to $50.7 million from $54.6 million a year ago.
Sales receded 1.8 percent to $350.7 million from $356.9 million and were down 0.8 percent on a constant-currency basis. Comparable-store sales, recorded in local currencies, were down 1.4 percent overall, consisting of a 1.6 percent decline in North America and a 1.1 percent dip in Europe.
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Gross margin declined to 47.7 percent of sales from 48.9 percent in the third quarter of last year, and inventories fell 13.9 percent, to $180.3 million from $209.5 million, and down 12 percent at constant currency. As it evaluates its real estate portfolio, total stores in operation, including franchises, fell to 3,472 at the end of the quarter from 3,532 a year ago.
While fourth-quarter comps so far in the fourth quarter have been essentially flat, Beatrice Lafon, chief executive officer of the teen- and tween-centered retail enterprise, saw some cause for optimism in recent performance.
“We are pleased that our fourth-quarter performance has improved and are also encouraged that our same-store sales during the week of Black Friday was slightly positive,” she said.
The firm’s strategy of opening concession locations has gained tractions, with 125 such locations, principally at Toys ‘R’ Us, in operation at the end of the quarter, up from 17 a year ago. Lafon said the concessions “exceeded our expectations in both Europe and North America. In addition, our e-commerce business continues to expand with strong growth and, like our brick-and-mortar business, experienced strong seasonal peaks.”
Lafon reported that, with accessories “performing well,” jewelry’s share of the business slipped to 52 percent in North America, down from 54.2 percent, and to 38.7 percent in Europe, down from 38.7 percent. North American business was bolstered by strength in Claire’s Club, tech accessories and handbags, she said.
Claire’s was acquired by Apollo Management LP for $3.1 billion and taken private in 2007. At the end of the quarter, long-term debt stood at $2.38 billion, essentially identical to the year-ago level.
In the nine months, the net loss grew to $85.5 million from a loss of $72.7 million a year ago while revenues ticked up 0.4 percent to $1.081 billion from $1.078 billion.