Fashion retailer Claire's for sale at $3bn

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The Independent Online

Claire's, the retailer of belts and bangles to teenage girls, has put itself up for sale with a price tag of at least $3bn (£1.5bn).

The company has hired Goldman Sachs for a strategic review and the bank has already started scouting for private equity buyers, hoping to take advantage of the boom in buyout activity on Wall Street.

A private equity takeover would provide a windfall for the family of Rowland Schaefer, the 90-year-old who floated the company in 1961 when it was a wig manufacturer called Fashion Trees. Ill health forced him to turn management of the company over to his daughters Marla and Bonnie in 2002 and they are now co-chief executive officers.

Together, the three own 9.3 per cent of the company, worth about $290m, and control 32 per cent of the votes through a special class of voting shares.

In a brief statement yesterday, the company said it was "exploring strategic alternatives for enhancing shareholder value, including a possible sale of the company. There can be no assurance that this process will result in any specific transaction".

Analysts said that private equity buyers would be attracted by Claire's strong cash flows and the fact that it has no debt, allowing a lucrative financial restructuring that could return a quick profit. The company's shares jumped 4 per cent in early Wall Street trading.

Claire's describes itself as "a leading international speciality retailer offering value-priced costume jewellery and accessories to fashion-aware tweens, teens and young adult females".

Its dominant position in this market has helped push the share price up fivefold in the past five years. It has expanded its merchandise to include cosmetics, room decor and new trendy accessories, while maintaining the ear-piercing service that first brought it to prominence in the US.

This year its total number of stores worldwide topped 3,000, including 2,106 in the US and 447 in the UK and Ireland.

However, sales growth has slowed to low single-digit percentage rates, despite continued international expansion, particularly in Europe. The company's most recent quarterly results showed a 4 per cent slide in net income, blamed in part on fewer shoppers at its British and French outlets.

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