Perfumania files Chapter 11; to close more stores
The nation's largest discount retailer of perfumes and specialty celebrity and designer fragrances has filed for bankruptcy protection with a goal of moving its business forward — and closing more stores.
Perfumania Holdings announced in a statement that it has initiated a recapitalization and filed for Chapter 11 bankruptcy protection to reduce its retail store count "to better align with current consumer shopping patterns." The company also said it planned to increase investments in its online business, and become a privately-held company.
“The company has been working diligently to amend its business model, reduce its cost structure, improve supply chain efficiency, optimize marketing, reduce expenses and improve operating results long-term,” stated president and CEO Michael Katz. “Today’s actions allow the company to expedite all of these initiatives to create a stronger company with the financial resources to invest in areas that will foster our long-term growth."
The Wall Street Journal reported that Perfumania plans to close 64 of its approximately 230 stores. The retailer noted it been reducing its retail portfolio by "accelerating the closure of under-performing stores and those stores in locations affected by declining mall traffic, as part of its strategy to maximize sales and improve store productivity and profitability."
Perfumania has a wholesale businesses, Parlux, which holds the exclusive distribution rights to President Trump’s fragrances Empire and Success, and Ivanka Trump’s fragrance. Parlux was not included in the filing. Neither was its Five Star Fragrance subsidiaries.
Perfumania employees will continue to receive salaries and benefits as normal, and the company's wholesale and retail customers will see no interruption in the flow of merchandise, according to the statement.
"There will be no changes to our license agreements and we will continue to uphold our obligations, and our valued vendors and suppliers will be paid in full,” stated Katz.
Perfumania's sales have been in decline. Revenue in the quarter ended April 29 fell 6.9% to $97.9 million, and its net loss widened to $9.7 million from $6.4 million a year earlier.
As of July 2017, Perfumania operated 230 corporate-owned retail stores as well as e-commerce, specializing in the sale of fragrances and related products across the United States, Puerto Rico, and the U.S. Virgin Islands.
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