Perfumania Holdings has announced it has initiated recapitalization, which includes filing for Chapter 11 relief in the U.S. Bankruptcy Court. Parlux and Five Star Fragrance are not included in the proceedings.
Perfumania says it will reduce its retail store footprint to better align with current consumer shopping patterns, while increasing investments in its e-commerce business. It will also become a privately-held company.
The company says its reorganization plans won't impact its customers, partners and licensors. “This process will allow us to more quickly adapt to the shift in consumer shopping habits by focusing more of our resources on implementing our e-commerce strategy, making Perfumania a stronger and more competitive company,” says Michael Katz, president and CEO, Perfumania.
Katz adds, “Our employees can be assured that during this time and beyond they will continue to receive their salaries and benefits. Our retail customers can continue to purchase the brands they love at our stores and online, and our wholesale and retail customers will not see any interruption in the flow of merchandise. 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."
Perfumania has ample liquidity to fund operations and has received a commitment for up to approximately $84 million in debtor-in-possession financing from its existing lender, Wells Fargo, which is expected to be replaced by a $100 million exit facility upon emergence.