L’Occitane in downtown New York. (Photo by Ben Gabbe / Getty Images)
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The U.S. branch of French beauty and well-being L’Occitane has embarked on Chapter 11 volunteer proceedings with the goal of reducing the footprint of 166-strong American retail store network by 23 to make the debt industry more viable.
According to court papers filed in New Jersey, L’Occitane “intends to reject some catastrophes in order to correct the brick-and-mortar footprint in order to position itself for long-term success. time. ”
The action affects L’Occitane en Provence boutiques across the US and does not include the parent, its subsidiaries, or other brands in the organization. All beauty wholesale stores, which are mostly slow-moving, will continue to trade and L’Occitane North America said in a statement that they had “sufficient liquidity to support business activity. as usual across all channels. ”
Investors hope to move to protect the industry and a restructuring a calmer and more adaptable entity can be seen. Shares in parent company L’Occitane International listed in Hong Kong have risen since its announcement on Tuesday. They closed Wednesday at HK $ 24, up 24.6%. The last stock to hit that price was in March 2013, almost eight years ago.
On Tuesday the company announced its results for the three months to December 2020 with its largest brands – L’Occitane en Provence (82% of total sales), Elemis (9%) and LimeLife (4.3%) – all back to growth mode (at regular exchange rates).
Business in Asia was very strong and Chanel veteran Yves Blouin is now on board to move further there. But the US is struggling. At steady rates, contracted revenues nearly 11% to $ 103 million against 29% growth in China and sales of $ 122 million over their quarter.
Chapter 11 seemed inevitable and the company is teaming up with a long list of established retail brands including the same including J. Crew, True Religion Apparel, and Brooks Brothers since their inception. pandemic.
23 stores identified for closure
In a statement to the court, Yann Tanini, L’Occitane North America’s regional managing director, said: “A number of these organizations have specifically sought to reject rent agreements in Chapter 11.” The wellness house plans to do the same and said it would be “appropriate to rent and close 23 places.” The company argues that by working now it could reduce liabilities from putting up rental obligations and also help get a raise for credit.
Sales from L’Occitane brick-and-mortar establishments have declined sharply by 56% since April 2020 compared to the previous year and e-commerce grew 72% over the same period. Online now accounts for nearly half of the company’s sales in the U.S. while the brick-and-mortar segment has fallen by nearly two-thirds.
L’Occitane argues that Chapter 11 was necessary after a retrospective and apparent attempt – trying to engage with the landlords to address what he describes as “conditions unmanageable source lease. ”
In a press release, Tanini said: “We look forward to working with our landlords to achieve partnerships that make economic sense in this current retail environment and enhance the best position on our tent brand store offer for years to come. ”
At the group level, L’Occitane International is close to finalizing another reorganization plan at its headquarters. Chairman Reinold Geiger says he is confident that the two restructures will deliver “better results than they were originally at the start of FY21”.