LEASE OBLIGATIONS BROUGHT L'OCCITANE PERFUME STORES TO BANKRUPTCY

French perfume and cosmetics brand L'Occitane has declared bankruptcy of its US retail chain. The company, which previously relied on selling goods through expensive boutiques, faced financial difficulties amid the pandemic. The retailer now plans to close 23 of the 166 retail pavilions located in the United States and Costa Rica.

Yann Tanini, managing director of L'Occitane's North American division, said the company was forced to file for bankruptcy by excessive lease obligations, according to the US media reports.

At the moment, they amount to more than $ 30 million a year, while the company's debt has already exceeded $ 15.1 million.

The regional executive noted that the company's boutique sales have dropped by 56.5% over the past year. At the same time, online sales of L'Occitane brand products increased by 72%.

The company continues to operate despite plans for restructuring. The representatives of L'Occitane stated in a press release that the brand has sufficient liquidity to maintain stable operations. Tanini said the company's recent actions were a step towards unlocking the potential that the L'Occitane brand had in the United States. Now the company's application is about to be considered by the American bankruptcy court in Trenton, New Jersey.

According to industry experts, the beauty industry in the United States has withstood the consequences of the pandemic quite confidently.

First of all, those companies that did not manage to properly establish interaction with online buyers faced financial problems. L'Occitane has been actively developing new ways of interacting with the target audience for the past year, trying to transform the retail space of its boutiques and establish work on the Internet, as it was noted in the claim filed in the court.

Despite the existing potential, the company has not managed to establish an understanding with landlords in a number of locations. Now, in the process of bankruptcy, the company hopes that it will be able to reject 29 leases, burdensome for further business. It is planned that L'Occitane will abandon some points of sale that no longer correspond to the spirit of the times.