##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended July 29, 2006
 OR
 o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __to __
Commission file number 001-08899
 Claires Stores, Inc.
  Florida
    
    59-0940416(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)3 S.W. 129th Avenue, Pembroke Pines, Florida
    
    33027(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number, including area code: (954) 433-3900
 x o
 o
 Large accelerated filer x
    
    Accelerated filer o
    
    Non-accelerated filer o
 o x




---



##### Table of Contents



CLAIRES STORES, INC. AND SUBSIDIARIES
INDEX
 PAGE NO.PART I. FINANCIAL INFORMATIONItem 1. Financial StatementsUnaudited Condensed Consolidated Balance Sheets at July 29, 2006 and January 28, 2006
    
    
    3Unaudited
Condensed Consolidated Statements of Operations and Comprehensive
Income for the     Three and Six Months Ended July 29, 2006 and July 30, 2005
    
    
    4Unaudited
Condensed Consolidated Statements of Cash Flows for the Six Months
Ended July 29, 2006 and     July 30, 2005
    
    
    5Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    12Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    21Item 4. Controls and Procedures
    
    
    22PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    23Item 1A. Risk Factors
    
    
    23Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    23Item 4. Submission of Matters to a Vote of Security Holders
    
    
    23Item 6. Exhibits
    
    
    25SIGNATURE PAGE
    
    
    26EX-31.1 Section 302 Certification of Co-Chief Executive OfficerEX-31.2 Section 302 Certification of Co-Chief Executive OfficerEX-31.3 Section 302 Certification of Chief Financial OfficerEX-32.1 Section 906 Certification of Co-Chief Executive OfficerEX-32.2 Section 906 Certification of Co-Chief Executive OfficerEX-32.3 Section 906 Certification of Chief Financial Officer
 2




---



##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 CLAIRES STORES, INC. AND SUBSIDIARIES
 
 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
 July 29, 2006
    
    Jan. 28, 2006(In thousands, except share and per share amounts)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    317,123
    
    
    $
    431,122Inventories
    
    
    133,591
    
    
    
    113,405Prepaid expenses
    
    
    41,873
    
    
    
    17,738Other current assets
    
    
    38,934
    
    
    
    35,742Total current assets
    
    
    531,521
    
    
    
    598,007Property and equipment:Land and building
    
    
    17,350
    
    
    
    18,151Furniture, fixtures and equipment
    
    
    266,801
    
    
    
    252,346Leasehold improvements
    
    
    265,665
    
    
    
    238,817549,816
    
    
    
    509,314Less accumulated depreciation and amortization
    
    
    (305,043
    )
    
    
    (286,595
    )244,773
    
    
    
    222,719Intangible assets, net of accumulated amortization of $11,657
and $10,550, respectively
    
    
    60,054
    
    
    
    56,175Other assets
    
    
    18,098
    
    
    
    15,162Goodwill
    
    
    200,072
    
    
    
    198,638278,224
    
    
    
    269,975Total assets
    
    $
    1,054,518
    
    
    $
    1,090,701LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Trade accounts payable
    
    $
    74,921
    
    
    $
    50,242Income taxes payable
    
    
    15,420
    
    
    
    36,708Accrued expenses and other liabilities
    
    
    92,660
    
    
    
    92,495Total current liabilities
    
    
    183,001
    
    
    
    179,445Long-term liabilities:Deferred tax liability
    
    
    21,207
    
    
    
    20,979Deferred rent expense
    
    
    23,727
    
    
    
    21,959Other liabilities
    
    
    1,414
    
    
    
    46,348
    
    
    
    42,938Commitments and contingencies
    
    
    
    
    
    
    Stockholders equity:Preferred stock par value $1.00 per share; authorized
1,000,000 shares, issued and outstanding 0 shares
    
    
    
    
    
    
    Class A common stock par value $0.05 per share;
authorized 40,000,000 shares, issued and outstanding
4,881,616
shares and 4,895,746 shares, respectively
    
    
    244
    
    
    
    245Common stock par value $0.05 per share; authorized
300,000,000 shares, issued and outstanding 91,375,607
shares and 94,580,977 shares, respectively
    
    
    4,569
    
    
    
    4,729Additional paid-in capital
    
    
    73,717
    
    
    
    63,321Unearned compensation
    
    
    
    
    
    
    (2,690
    )Accumulated other comprehensive income, net of tax
    
    
    30,037
    
    
    
    21,036Retained earnings
    
    
    716,602
    
    
    
    781,677825,169
    
    
    
    868,318Total liabilities and stockholders equity
    
    $
    1,054,518
    
    
    $
    1,090,701
  3




---



##### Table of Contents



CLAIRES STORES, INC. AND SUBSIDIARIES
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS AND COMPREHENSIVE INCOME
 Three Months Ended
    
    Six Months EndedJuly 29,
    
    July 30,
    
    July 29,
    
    July 30,2006
    
    2005
    
    2006
    
    2005(In thousands, except per share amounts)Net sales
    
    $
    349,160
    
    
    $
    325,042
    
    
    $
    661,087
    
    
    $
    627,750Cost of sales, occupancy and buying expenses
    
    
    167,879
    
    
    
    151,848
    
    
    
    315,053
    
    
    
    290,543Gross profit
    
    
    181,281
    
    
    
    173,194
    
    
    
    346,034
    
    
    
    337,207Other expenses (income):Selling, general and administrative
    
    
    118,109
    
    
    
    111,574
    
    
    
    229,785
    
    
    
    222,091Depreciation and amortization
    
    
    13,912
    
    
    
    11,776
    
    
    
    27,070
    
    
    
    24,124Interest and other income
    
    
    (4,681
    )
    
    
    (3,083
    )
    
    
    (9,248
    )
    
    
    (5,044
    )127,340
    
    
    
    120,267
    
    
    
    247,607
    
    
    
    241,171Income before income taxes
    
    
    53,941
    
    
    
    52,927
    
    
    
    98,427
    
    
    
    96,036Income taxes
    
    
    17,979
    
    
    
    17,469
    
    
    
    32,764
    
    
    
    30,876Net income
    
    
    35,962
    
    
    
    35,458
    
    
    
    65,663
    
    
    
    65,160Foreign currency translation adjustments
    
    
    1,307
    
    
    
    (7,615
    )
    
    
    9,001
    
    
    
    (9,269
    )Comprehensive income
    
    $
    37,269
    
    
    $
    27,843
    
    
    $
    74,664
    
    
    $
    55,891Net income per share:Basic
    
    $
    0.37
    
    
    $
    0.36
    
    
    $
    0.67
    
    
    $
    0.66Diluted
    
    $
    0.37
    
    
    $
    0.36
    
    
    $
    0.67
    
    
    $
    0.66Basic weighted average number of common
shares outstanding
    
    
    97,560
    
    
    
    99,056
    
    
    
    98,360
    
    
    
    99,025Diluted weighted average number of common
and common equivalent shares outstanding
    
    
    97,769
    
    
    
    99,441
    
    
    
    98,675
    
    
    
    99,401Dividends declared per share:Common stock
    
    $
    0.10
    
    
    $
    0.10
    
    
    $
    0.20
    
    
    $
    0.20Class A common stock
    
    $
    0.05
    
    
    $
    0.05
    
    
    $
    0.10
    
    
    $
    0.10
  4




---



##### Table of Contents



CLAIRES STORES, INC. AND SUBSIDIARIES
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Six Months EndedJuly 29, 2006
    
    July 30, 2005(In thousands)Cash flows from operating activities:Net income
    
    $
    65,663
    
    
    $
    65,160Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization
    
    
    27,070
    
    
    
    24,124Amortization of intangible assets
    
    
    703
    
    
    
    502Loss on sale/retirement of property and equipment, net
    
    
    570
    
    
    
    1,582Gain on sale of intangible assets
    
    
    (47
    )
    
    
    Excess tax benefit from stock-based compensation
    
    
    (3,442
    )
    
    
    Stock-based compensation expense
    
    
    3,810
    
    
    
    1,605Increase in -Inventories
    
    
    (18,772
    )
    
    
    (11,839
    )Prepaid expenses
    
    
    (23,272
    )
    
    
    (11,046
    )Other assets
    
    
    (3,615
    )
    
    
    (3,041
    )Increase (decrease) in -Trade accounts payable
    
    
    23,077
    
    
    
    19,878Income taxes payable
    
    
    (17,717
    )
    
    
    (21,257
    )Accrued expenses and other liabilities
    
    
    (2,403
    )
    
    
    (10,266
    )Deferred income taxes
    
    
    (1,813
    )
    
    
    (25
    )Deferred rent expense
    
    
    1,529
    
    
    
    1,421Net cash provided by operating activities
    
    
    51,341
    
    
    
    56,798Cash flows from investing activities:Acquisition of property and equipment
    
    
    (46,634
    )
    
    
    (34,433
    )Proceeds from sale of land and building
    
    
    881
    
    
    
    Acquisition of intangible assets
    
    
    (1,659
    )
    
    
    (3,492
    )Purchase of short-term investments
    
    
    
    
    
    
    (82,334
    )Sale of short-term investments
    
    
    
    
    
    
    216,947Net cash provided by (used in) investing activities
    
    
    (47,412
    )
    
    
    96,688Cash flows from financing activities:Proceeds from stock options exercised
    
    
    8,497
    
    
    
    1,628Purchase and retirement of common stock
    
    
    (111,701
    )
    
    
    Excess tax benefit from stock-based compensation
    
    
    3,442
    
    
    
    Dividends paid
    
    
    (19,231
    )
    
    
    (19,321
    )Net cash used in financing activities
    
    
    (118,993
    )
    
    
    (17,693
    )Effect of foreign currency exchange rate changes on cash
and cash equivalents
    
    
    1,065
    
    
    
    1,386Net increase (decrease) in cash and cash equivalents
    
    
    (113,999
    )
    
    
    137,179Cash and cash equivalents at beginning of period
    
    
    431,122
    
    
    
    191,006Cash and cash equivalents at end of period
    
    $
    317,123
    
    
    $
    328,185
  5




---



##### Table of Contents



CLAIRES STORES, INC. AND SUBSIDIARIES
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 1.
    
    Basis of Presentation and Significant Accounting Policies
  Stock-Based Compensation
     Recent Accounting Pronouncements
   6




---



##### Table of Contents



2.
    
    Earnings Per Share
  Three Months Ended
    
    Six Months EndedJuly 29, 2006
    
    July 30, 2005
    
    July 29, 2006
    
    July 30, 2005Numerator:Net income
    
    $
    35,962
    
    
    $
    35,458
    
    
    $
    65,663
    
    
    $
    65,160Denominator:Weighted average number of shares outstandingBasic
    
    
    97,560
    
    
    
    99,056
    
    
    
    98,360
    
    
    
    99,025Effect of dilutive stock options
    
    
    175
    
    
    
    363
    
    
    
    257
    
    
    
    363Effect of dilutive time-vested and long
term incentive stock awards
    
    
    34
    
    
    
    22
    
    
    
    58
    
    
    
    13Diluted
    
    
    97,769
    
    
    
    99,441
    
    
    
    98,675
    
    
    
    99,401Net income per share:Basic
    
    $
    0.37
    
    
    $
    0.36
    
    
    $
    0.67
    
    
    $
    0.66Diluted
    
    $
    0.37
    
    
    $
    0.36
    
    
    $
    0.67
    
    
    $
    0.66
  3.
    
    Stock-Based Compensation
   7




---



##### Table of Contents



Three Months Ended
    
    Six Months EndedJuly 30,
    
    July 30,2005
    
    2005Net income  as reported
    
    $
    35,458
    
    
    $
    65,160Stock-based employee compensation
expense determined under the fair
value based methods, net of income tax
    
    
    (846
    )
    
    
    (1,736
    )Stock-based employee compensation
expense included in reported net
income, net of income tax
    
    
    627
    
    
    
    1,043Net income  pro forma
    
    $
    35,239
    
    
    $
    64,467Basic net income per share  as reported
    
    $
    0.36
    
    
    $
    0.66Basic net income per share  pro forma
    
    $
    0.36
    
    
    $
    0.65Diluted net income per share  as reported
    
    $
    0.36
    
    
    $
    0.66Diluted net income per share  pro forma
    
    $
    0.35
    
    
    $
    0.65
      8




---



##### Table of Contents



Six Months Ended July 29, 2006WeightedWeighted
    
    AverageAverage
    
    Remaining
    
    AggregateNumber of
    
    Exercise
    
    Contractual
    
    IntrinsicShares
    
    Price
    
    Life (Years)
    
    ValueOutstanding at beginning of
period
    
    
    1,113,436
    
    
    $
    15.33Options granted
    
    
    
    
    
    
    Options exercised
    
    
    (590,436
    )
    
    $
    14.40Options canceled
    
    
    (10,000
    )
    
    $
    16.93Outstanding at end of period
    
    
    513,000
    
    
    $
    16.36
    
    
    
    6.58
    
    
    $
    4,522,850Exercisable at end of period
    
    
    513,000
    
    
    $
    16.36
    
    
    
    6.58
    
    
    $
    4,522,850
 9




---



##### Table of Contents



Time-Vested Stock Awards
    Weighted-AverageTime-Vested Shares
    
    Shares
    

Grant Date Fair ValueNonvested at beginning of period
    
    
    169,933
    
    
    $
    22.48Granted
    
    
    18,400
    
    
    $
    24.38Vested
    
    
    (57,433
    )
    
    $
    23.02Forfeited
    
    
    
    
    
    
    Nonvested at end of period
    
    
    130,900
    
    
    $
    22.52
 Long-Term Incentive Stock Plan
 10




---



##### Table of Contents



4.
    
    Segment Information
  Net Sales
    
    Income Before Income Taxes
    
    Net Sales
    
    Income Before Income TaxesThree Months Ended
    
    Three Months Ended
    
    Six Months Ended
    
    Six Months EndedJuly 29,
    
    July 30,
    
    July 29,
    
    July 30,
    
    July 29,
    
    July 30,
    
    July 29,
    
    July 30,2006
    
    2005
    
    2006
    
    2005
    
    2006
    
    2005
    
    2006
    
    2005North America
    
    $
    237,306
    
    
    $
    222,929
    
    
    $
    38,840
    
    
    $
    36,586
    
    
    $
    462,863
    
    
    $
    439,269
    
    
    $
    81,819
    
    
    $
    77,883International
    
    
    111,854
    
    
    
    102,113
    
    
    
    15,101
    
    
    
    16,341
    
    
    
    198,224
    
    
    
    188,481
    
    
    
    16,608
    
    
    
    18,153Total
    
    $
    349,160
    
    
    $
    325,042
    
    
    $
    53,941
    
    
    $
    52,927
    
    
    $
    661,087
    
    
    $
    627,750
    
    
    $
    98,427
    
    
    $
    96,036
 11




---



##### Table of Contents



5.
    
    Income Taxes
  6.
    
    Statements of Cash Flows
   7.
    
    Stockholders Equity
   8.
    
    Commitments and Contingencies
  
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    12




---



##### Table of Contents



Overview
    
    
    maximizing the effectiveness of our retail product pricing through promotional activity
    
    minimizing our product costs through economies of scale as the worlds leading
mall-based retailer of value-priced accessories and jewelry
    
    reinvesting operating cash flows into opening new stores, remodeling existing stores and
infrastructure in order to create future revenues and build brand name loyalty
  
    
    successfully identifying merchandise appealing to our customers and managing our
inventory levels
    
    displaying our merchandise at convenient, accessible locations staffed with personnel
that provide courteous and professional customer service
    
    sourcing our merchandise to achieve a positive price/value relationship
    
    increasing sales at existing store locations
    
    expanding our sales, especially in our International division, through additional store locations
 13




---



##### Table of Contents



Critical Accounting Policies and Estimates
  Stock-Based Compensation
       14




---



##### Table of Contents



Results of Operations
 Consolidated Operations
  Three Months Ended
    
    Six Months EndedJuly 29, 2006
    
    July 30, 2005
    
    July 29, 2006
    
    July 30, 2005Net sales
    
    $
    349,160
    
    
    $
    325,042
    
    
    $
    661,087
    
    
    $
    627,750Increase in comparable store sales
    
    
    2.0
    %
    
    
    5.0
    %
    
    
    3.0
    %
    
    
    5.0
    %Gross profit percentage
    
    
    51.9
    %
    
    
    53.3
    %
    
    
    52.3
    %
    
    
    53.7
    %Selling,
general and administrative expenses
as a percentage of Net sales
    
    
    33.8
    %
    
    
    34.3
    %
    
    
    34.7
    %
    
    
    35.4
    %Net income
    
    $
    35,962
    
    
    $
    35,458
    
    
    $
    65,663
    
    
    $
    65,160Net income per diluted share
    
    $
    0.37
    
    
    $
    0.36
    
    
    $
    0.67
    
    
    $
    0.66Number of stores at the end of the period (1)
    
    
    2,935
    
    
    
    2,851
    
    
    
    2,935
    
    
    
    2,851
 
 (1)
    
    Number of stores excludes Claires Nippon and stores operated under licensing agreements outside of North America     Three Months Ended
    
    Six Months EndedJuly 29, 2006
    
    July 30, 2005
    
    July 29, 2006
    
    July 30, 2005Jewelry
    
    
    60.0
    %
    
    
    60.0
    %
    
    
    61.0
    %
    
    
    59.0
    %Accessories
    
    
    40.0
    %
    
    
    40.0
    %
    
    
    39.0
    %
    
    
    41.0
    %100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
 15




---



##### Table of Contents



Segment Operations
  North America
  Three Months Ended
    
    Six Months EndedJuly 29, 2006
    
    July 30, 2005
    
    July 29, 2006
    
    July 30, 2005Net sales
    
    $
    237,306
    
    
    $
    222,929
    
    
    $
    462,863
    
    
    $
    439,269Increase in comparable store sales
    
    
    4.0
    %
    
    
    3.0
    %
    
    
    4.0
    %
    
    
    3.0
    %Gross profit percentage
    
    
    51.3
    %
    
    
    52.5
    %
    
    
    52.9
    %
    
    
    54.1
    %Number of stores at the end of the period (1)
    
    
    2,124
    
    
    
    2,115
    
    
    
    2,124
    
    
    
    2,115
 
 (1)
    
    Number of stores excludes Claires Nippon and stores
operated under licensing agreements outside of North America. 16




---



##### Table of Contents



Three Months Ended
    
    Six Months EndedJuly 29, 2006
    
    July 30, 2005
    
    July 29, 2006
    
    July 30, 2005Jewelry
    
    
    66.0
    %
    
    
    67.0
    %
    
    
    66.0
    %
    
    
    67.0
    %Accessories
    
    
    34.0
    %
    
    
    33.0
    %
    
    
    34.0
    %
    
    
    33.0
    %100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
  17




---



##### Table of Contents



International
  Three Months Ended
    
    Six Months EndedJuly 29, 2006
    
    July 30, 2005
    
    July 29, 2006
    
    July 30, 2005Net sales
    
    $
    111,854
    
    
    $
    102,113
    
    
    $
    198,224
    
    
    $
    188,481Increase (decrease) in comparable store sales
    
    
    (2.0
    %)
    
    
    9.0
    %
    
    
    (1.0
    %)
    
    
    9.0
    %Gross profit percentage
    
    
    53.3
    %
    
    
    55.1
    %
    
    
    50.9
    %
    
    
    52.8
    %Number of stores at the end of the period (1)
    
    
    811
    
    
    
    736
    
    
    
    811
    
    
    
    736
 
 (1)
    
    Number of stores excludes Claires Nippon and stores
operated under licensing agreements.     18




---



##### Table of Contents



Three Months Ended
    
    Six Months EndedJuly 29, 2006
    
    July 30, 2005
    
    July 29, 2006
    
    July 30, 2005Jewelry
    
    
    49.0
    %
    
    
    45.0
    %
    
    
    49.0
    %
    
    
    44.0
    %Accessories
    
    
    51.0
    %
    
    
    55.0
    %
    
    
    51.0
    %
    
    
    56.0
    %100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
 Analysis of Consolidated Financial Condition
  Six Months EndedJuly 29, 2006
    
    July 30, 2005Operating activities
    
    $
    51,341
    
    
    $
    56,798Investing activities
    
    $
    ( 47,412
    )
    
    $
    96,688Financing activities
    
    $
    (118,993
    )
    
    $
    (17,693
    )
     19




---



##### Table of Contents



Credit Arrangements
    20




---



##### Table of Contents



Recent Accounting Pronouncements
   Cautionary Note Regarding Forward-Looking Statements and Risk Factors
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Foreign Currency
  21




---



##### Table of Contents



Interest Rates
  
 Item 4. Controls and Procedures
   22




---



##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
   Total Number of
    
    Approximate DollarTotal
    
    
    
    
    
    Shares Purchased
    
    Value of Shares thatNumber
    
    Average
    
    as Part of Publicly
    
    May Yet beof Shares
    
    Price Paid
    
    Announced
    
    Purchased UnderPeriod
    
    Purchased
    
    per Share
    
    Programs
    
    the ProgramsApril 30, 2006  May 27, 2006
    
    
    835
    
    
    $
    29.98
    
    
    
    835
    
    
    $
    139,777May 28, 2006  July 1, 2006
    
    
    1,065
    
    
    
    26.19
    
    
    
    1,065
    
    
    
    111,891July 2, 2006  July 29, 2006
    
    
    950
    
    
    
    24.83
    
    
    
    950
    
    
    
    88,299Total Second Quarter
    
    
    2,850
    
    
    $
    26.85
    
    
    
    2,850
    
    
    $
    88,299
 
 Item 4. Submission of Matters to a Vote of Security Holders
      23




---



##### Table of Contents



COMMON
    
    
    
    
    
    CLASS ASTOCK
    
    VOTES
    
    STOCK
    
    VOTESDIRECTOR NOMINEE
    
    VOTES FOR
    
    WITHHELD
    
    VOTES FOR
    
    WITHHELDMarla L. Schaefer
    
    
    80,926,214
    
    
    
    2,578,870
    
    
    
    47,684,200
    
    
    
    34,800E. Bonnie Schaefer
    
    
    80,922,943
    
    
    
    2,582,141
    
    
    
    47,686,280
    
    
    
    32,720Ira D. Kaplan
    
    
    78,294,097
    
    
    
    5,210,987
    
    
    
    47,686,280
    
    
    
    32,720Bruce G. Miller
    
    
    79,589,508
    
    
    
    3,915,576
    
    
    
    47,686,280
    
    
    
    32,720Steven H. Tishman
    
    
    82,999,169
    
    
    
    505,915
    
    
    
    47,682,500
    
    
    
    36,500Martha Clark Goss
    
    
    80,830,134
    
    
    
    2,674,950
    
    
    
    47,686,280
    
    
    
    32,720Ann Spector Lieff
    
    
    80,161,255
    
    
    
    3,343,829
    
    
    
    47,684,640
    
    
    
    34,360
  VOTEDSHARES
    
    VOTED FOR
    
    AGAINST
    
    ABSTAINCommon stock
    
    
    80,953,662
    
    
    
    2,510,065
    
    
    
    41,357Class A stock
    
    
    47,691,480
    
    
    
    9,220
    
    
    
    18,300
  VOTED
    
    
    
    
    
    BROKERSHARES
    
    VOTED FOR
    
    AGAINST
    
    ABSTAIN
    
    NON-VOTECommon stock
    
    
    10,497,094
    
    
    
    59,369,644
    
    
    
    5,985,789
    
    
    
    7,652,557Class A stock
    
    
    107,200
    
    
    
    46,605,990
    
    
    
    63,250
    
    
    
    942,560
 24




---



##### Table of Contents



Item 6. Exhibits
 31.1
    
    Certification of Co-Chief Executive Officer pursuant to Rule
13a-14(a) and 15d-14(a).31.2
    
    Certification of Co-Chief Executive Officer pursuant to Rule
13a-14(a) and 15d-14(a).31.3
    
    Certification of Chief Financial Officer pursuant to Rule
13a-14(a) and 15d-14(a).32.1
    
    Certification of Co-Chief Executive Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.32.2
    
    Certification of Co-Chief Executive Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.32.3
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
 Items 3 and 5 are not applicable and have been omitted.
 25




---



##### Table of Contents



SIGNATURE
  CLAIRES STORES, INC.
(Registrant)September 6, 2006
    /s/ Marla L. SchaeferMarla L. SchaeferCo-Chairman of the Board of
Directors
(principal co-executive officer and
director)September 6, 2006
    /s/ E. Bonnie SchaeferE. Bonnie SchaeferCo-Chairman of the Board of
Directors
(principal co-executive officer and
director)September 6, 2006
    /s/ Ira D. KaplanIra D. Kaplan, Senior Vice President,Chief Financial Officer and
Director
(principal financial and accounting
officer and director) 26




---



##### Table of Contents



INDEX TO EXHIBITS
 EXHIBIT NO.
    
    DESCRIPTION31.1
    
    Certification of Co-Chief Executive Officer pursuant to Rule
13a-14(a) and 15d-14(a).31.2
    
    Certification of Co-Chief Executive Officer pursuant to Rule
13a-14(a) and 15d-14(a).31.3
    
    Certification of Chief Financial Officer pursuant to Rule
13a-14(a) and 15d-14(a).32.1
    
    Certification of Co-Chief Executive Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.32.2
    
    Certification of Co-Chief Executive Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.32.3
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
 27