Claire’s Stores Inc. bondholders are signaling their distress as the girls-jewelry retailer’s least-profitable holiday season in five years prompts the company to turn to its third chief executive officer since 2007.
Weighed down by $2.4 billion of debt after its buyout by Apollo Global Management LLC (APO), yields on the company’s most-widely traded bonds due March 2019 surged to 12 percent yesterday. The bonds, which yield more than 10 percentage points above similar-maturity Treasuries, now join Claire’s longest-maturity notes among securities considered distressed.
The company, whose same-store sales fell 10.7 percent in its fiscal fourth quarter as a global expansion failed to improve earnings, is now seeking to lure customers with an exclusive jewelry line with singer Katy Perry and a partnership with Dylan’s Candy Bar, the confectioner run by the daughter of designer Ralph Lauren, Claire’s chief financial officer, J. Per Brodin, said during a conference call with analysts and investors yesterday. Beatrice Lafon, president of Claire’s European unit, is taking over as CEO following the resignation of James Fielding.
“The magnitude of the same-store sales decline was meaningfully below our expectations,” David Kuntz, an analyst with Standard & Poor’s, said in a telephone interview. The Katy Perry and Dylan’s Candy lines can help “pique people’s interest,” pulling shoppers into the retailer’s 3,535 stores.