Claire’s owner Ames Watson feuds with Asia suppliers during bankruptcy
Chris Ratcliffe | Bloomberg | Getty Images
Tween retailer Claire’s is facing legal challenges over millions in unpaid debts from some of its Asia-based suppliers as it tries to emerge from a second bankruptcy under new ownership, according to claims filed by the suppliers in Hong Kong.
The clash with vendors comes as private equity firm Ames Watson is going through his first holiday season as Claire’s new owner, working to ensure he has the right products in stock after buying the mall retailer and its nearly 1,000 stores out of bankruptcy in September for $140 million.
Since acquiring Claire’s, Ames Watson has been trying to rebuild what co-founder Lawrence Berger previously told CNBC was a “broken business.” The goal of returning the company to profitability will depend in part on a successful holiday season and the ability to stock popular products.
The retailer’s expanded supply chain of longtime vendors equipped to meet stringent safety standards for children’s products has long been considered the company’s “secret sauce,” former Claire’s CEO Ron Marshall told CNBC. Marshall, who ran the company from 2016 to 2019, said the retailer’s holiday season would have been a “nightmare” without the support of those suppliers during the first bankruptcy in 2018.
The dispute with suppliers is creating another challenge for Ames Watson, which has been trying to turn around the long-struggling retailer. As the U.S. approaches the final days of the shopping peak, Ames Watson said, “Claire’s is well stocked for the holiday season.”
Conflict over orders
Claire’s disputes with its suppliers in Asia related to orders placed in the months before the retailer filed for its second bankruptcy in August; at the time it was still owned by hedge fund Elliott Management and was experiencing financial difficulties.
Claire’s order volume for a supplier fell 79% in March and 76% in April compared to the previous year, according to records reviewed by CNBC. Orders then returned to the company’s normal pace in May and June, with volume falling only 2% and 3% respectively in those months compared to 2024, records show.
According to an affidavit filed by Claire’s CEO Chris Cramer in court after the company filed for bankruptcy, the company was strapped for cash, considering outright liquidation and looking for a buyer to save its business when Claire’s increased orders again.
Sellers, including those who are now taking legal action against the retailer, expected to be paid as they were when the retailer placed their orders, even though they were aware that the company was facing financial difficulties when the orders were placed. People who spoke on condition of anonymity because the discussions were private said that the first bankruptcy application was made.
But when sellers finished producing the body jewelry, nail polish and friendship bracelets Claire had ordered ahead of the holiday shopping season, the retailer filed for bankruptcy protection and sellers were not paid for some orders.
When Ames Watson bought the company, some of the indebted vendors agreed to continue working with Claire’s without paying off their debts, out of concern they would lose one of their largest customers and potentially their jobs, sources said. But others refused and took legal action against Claire’s Hong Kong-based sourcing office RSI International over millions in unpaid debts, according to claims the suppliers filed in local court.
Meanwhile, about a week after Ames Watson announced it would save Claire’s from bankruptcy, RSI International filed a notice to transfer its assets to a new entity. The business transfer gave creditors 30 days to file a claim for compensation for outstanding debts; After this period, transferors will not be liable for obligations under the Hong Kong Law.
Ames Watson did not comment on RSI International in his statement to CNBC. He said he was “not involved in the operation or purchasing decisions made prior to the acquisition.”
“Since then, we have focused on managing the business responsibly and engaging suppliers in good faith, while strengthening Claire’s business for the long term,” the company said. “We are excited about the company’s trajectory in 2026,” he added.
Elliott Management, the hedge fund that owns Claire’s at the time the orders were made, declined to comment.
holiday bets
At the heart of Ames Watson’s strategy for portraying Claire’s Improving its products, which can become even more difficult if the company has strained relationships with some suppliers. Further complicating the problem are President Donald Trump’s sweeping tariffs, which are already straining retail supply chains around the world and increasing costs for importers.
Marshall, the former Claire’s CEO, said ensuring sellers in Asia got paid during the company’s first bankruptcy was key to having the right products on hand for that year’s holiday season.
“These were suppliers with whom we had relationships for generations and in many cases represented 30, 40, 50% or even more of their total volume, and the intellectual capital represented was fundamental to Claire’s success,” Marshall said. “There’s a difference between having product on the shelves (which we could do) and having the right product on the shelves.”
He said Claire’s’ disputes with its suppliers could “disrupt the supply chain” and make returns even more difficult, both now and in the future.
“Needs a fresh, new product to attract [customers] “If you’re not constantly refreshing a really exciting product when you walk into the store, she’s going to ignore you,” Marshall said. “This is literally the most fickle customer in the world: an 8-year-old girl.”
