ICSM Retail Insolvency News: 145 Claire’s stores left out in the cold in rescue deal

By Harry Mottram: The fashion, jewellery and accessory chain Claire’s went bust last summer but has continued to trade normally while a buyer was found. Modella Capital has agreed to buy 154 outlets of the struggling business out of administration leaving 145 more stores out of the deal along with around 2,000 workers without a job. Suppliers too will be concerned that a long list of invoices for their hair bands, earrings, and jewellery, may not be honoured.

There will be concerns as well over Modella Capital’s long term plans since they have made a habit of buying up struggling retailers for bargain prices but only retaining the profitable sites. Apart from Claire’s they have snapped up the high street shops of WH Smith, plus Hobbycraft and The Original Factory Shop in a retail climate that has seen footfall drop due to the rise of online shopping.

Will Wright, Interpath's UK chief executive and joint administrator, added: "Our intention is to continue to trade the remaining portfolio of stores for as long as we can, while we explore the options available."

Joe Price, managing director at Modella Capital, said: "We strongly believe this much-loved brand deserves the chance to remain on the High Street in the UK and Ireland."

The received wisdom is a little less romantic when it comes to private equity firms buying businesses since they are not rooted in the business as an idea and are not charities. Private equity’s first priority is to make a profit for its owners and if that means asset stripping then traditionally that has often been the way these things go. Cut the business down to size, dump the parts that are making a loss and then sell it on if necessary having made a good return.

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