Since Perfumania opened its first store in 1987, the Bellport, N.Y.-based fragrance retailer has made a name for itself in shopping malls and strip centers nationwide, establishing itself as the single largest player in the promotional designer fragrance space. In 2008, Perfumania’s publicly traded parent company, Perfumania Holdings Inc., added a lineup of wholesale and manufacturing businesses and fragrance consignment programs to its retail presence, and fiscal 2009 net sales for the combined companies was $511 million.
Today Perfumania operates 350 retail stores in the United States and 20 in Puerto Rico. The company opened 57 stores in 2009, and nine stores in 2010. This year, it plans to open 10 to 15 locations, and is considering a Canada market debut.
Perfumania has outlined an aggressive growth strategy that could ultimately see 600 retail doors in North America and Puerto Rico. But the downturn has slowed its expansion rate.
“Our expectation is that we will be in a good position to expand when the time is right,” said Michael Katz, president and CEO, Perfumania Holdings Inc. “We have the infrastructure in place to expand as economic recovery occurs, but we are not actively chasing growth until that happens.”
To prep for expansion and to shore up its real estate position, Perfumania retained New York-based RCS Real Estate Advisors in January 2009 to act as its outsourced real estate arm. RCS responsibilities include lease renewals and renegotiations, terminations as required and, for new locations, all site selection and lease negotiation duties. But, according to Ivan Friedman, president and CEO of RCS, the top priority from day one has been portfolio evaluation and maximization.
“Before we joined Perfumania in 2009, we reviewed the portfolio, and we discovered a host of locations that were operating under lease rates that were too high,” Friedman said. “Because of that, the company had a lot of unprofitable locations.”
RCS’ focus has been on aligning the existing portfolio of 370 locations so that the rents are acceptable and the stor