March 18--Teen accessories chain Claire's took a big hit to its bottom line during the important holiday quarter as heavy discounting, sluggish mall traffic and West Coast port delays compounded ongoing struggles to get girls to buy its jewelry.
Here's how the quarter and year played out for the Hoffman Estates-based retailer, and a bit of what's to come:
Net loss: Claire's lost $122 million in the three months ended Jan. 31, compared with a profit of $7.4 million over the same period the prior year. For the year, the company lost $207 million, wider than the $65 million loss in 2013.
Revenue: Fourth-quarter revenue was $412.4 million, down from $435.5 million in the fourth quarter a year earlier. For the year, sales fell to $1.49 billion, down from $1.51 billion in 2013.
Same-store sales: Sales at stores open at least a year, which excludes the revenue impact of newly opened or closed stores, were down 2.3 percent in the fourth quarter, with its European stores reporting the steepest declines. That follows a 10.7 percent decline in same-store sales during the fourth quarter a year earlier. For the year, same-store sales were down 2.2 percent, after a 3.9 percent decrease in same-store sales in 2013.
The "why": Revenues were down in part because of store closings; Claire's ended the year with 3,440 stores globally, compared with 3,535 it had the previous year. But stiff competition from other retailers, sluggish mall traffic and lower demand for jewelry also have driven down sales. Europe, which accounts for 40 percent of the company's sales and in recent quarters has performed better than North America, had several issues that affected shopping generally, including the terrorist attacks in Paris and an early start to Carnival season, CEO Beatrice Lafon said Wednesday. In addition, the work slowdown at the West Coast ports delayed shipments, contributing to an estimated $10 million in lost sales, the company said.
Highlights from the year: To mitigate the affect of mall traffic declines, Claire's expanded a pilot program to open branded "concession" stores inside Toys R Us locations. It ended the year with 130 concession stores, 14 in North America and the rest in Europe. Lafon said sales there have exceeded expectations.
2015 first-quarter outlook: Claire's warned that the delayed receipt of goods from the West Coast port backlog will continue to impact first-quarter sales.
What's next: The company plans to open another 450 Claire's-branded concession stores within Toys R Us locations and other partners in 2015, half of them in North America. It also plans to close 80 to 100 underperforming stores. In addition, the company is reorganizing its buying and merchandising teams into one department based in Hoffman Estates. Sales have been declining among girls ages 6 to 12, Lafon said.
aelejalderuiz@tribpub.com
