FALLING ON (ED)HARD(Y) TIMES
Last Saturday Perfumania Holdings filed for Chapter 11 bankruptcy, announcing it will close 64 of its 226 stores. Although Perfumania already closed 103 stores in the past three years, the company was still losing money. CEO Michael Katz cited the declining popularity of brick-and-mortar stores, but he has plans to restructure.
As part of the reorganization, the company is going private. Katz hopes to put more emphasis on online shopping, renegotiate leases, and focus on high performing stores. In a prepared statement, he said there will be no changes in licensing agreements, employees “will continue to receive their salaries and benefits,” and “retail customers will not see any interruption in the flow of merchandise.”
BURBERRY MY HEART
My first real job was at a perfume store in an outlet mall. Fun fact: if you work the Black Friday 2AM shift, your lips will get chapped from spraying so many samples. Our rival Perfumania was situated in the desirable area in front of the food court. We were tucked between a tween jewelry outlet and cookie store people avoided because it was dangerously good.
Despite the number of people that came in asking for the most expensive perfume— even though it smelled like cotton candy body spray—it was hard to make the sales goals each month.
And I just worked for a relatively unknown, not very creatively named chain.
Although Perfumania definitely got more foot traffic, consumer patterns have changed to favor ecommerce over malls.
VIVA LA JUICY DETAILS
In 1980, Perfumania came into existence. Since then, in purchased Model Reorg Inc. in 2008, and outstanding common stock of Paralux in 2012. As its empire grew, the company gained exclusive rights to Trump-branded fragrances, as well as a slew of other celebrities like Rihanna and Jay Z.
Now Perfumania is once again getting a loan from Wells Fargo…to pay off their other loan from Wells Fargo. The $83.75 million bankruptcy loan will be used to repay the $18.78 million pre-bankruptcy loan.
Unsecured creditors will be reinstated or paid in cash.
The company stresses wholesale brand Paralux, who owns the rights to Trump’s fragrances, and Five Star Fragrance are not included in the Chapter 11 filings.
ETERNITY ISN’T FOREVER
While many companies filing for Chapter 11 have outright closed, I applaud Perfumania for hanging in there. Maybe they’ll make a miraculous turnaround and dominate the ecommerce fragrance market.
If not, I will leave you with this wisdom: perfume and cologne can last up to seven years if kept in a cool, dry place. So stockpile your favorite wholesale fragrances and hold tight just in case Perfumania goes under.