THE WHAT? The U.S. arm of beauty retailer L’Occitane has filed for Chapter 11 bankruptcy this week in the hope of reducing its number of stores that have been hit by losses due to store closures.

THE DETAILS Aiming to close 23 stores immediately, the company said in a press release that its ‘business continues to be impacted by disproportionately high store rent obligations that are no longer tenable.’

Taking to court papers, Yann Tanini, Managing Director of L’Occitane North America, said that the company had annual lease obligations of $30.3 million, has $15.1 million in arrears, and that landlords are withholding more than $500,000 in security deposits. 

Tanini continued, “[T]he Debtor’s primary goal in chapter 11 is to right-size its physical footprint in part by rejecting certain leases to enable the Debtor to better adapt and cultivate sustained profitability in light of the increasing shift to online purchasing and the impact of the COVID-19 pandemic on brick-and-mortar retail sales.”

THE WHY? L’Occitane’s Chapter 11 filing highlights the ongoing issue of empty stores amidst the pandemic, with retailers looking to bankruptcy options to remove themselves from lease contracts and enter into negotiations with landlords. 

While the pandemic hit L’Occitane’s in-store sales, down 21 percent between April and December YOY, the company has reported e-commerce sales increases of 72 percent.

L’Occitane stated that the filing will “further accelerate a transformation already well underway to best position its business for the future.”