As a result of store closings related to the COVID-19 pandemic, and unmanageable store lease terms, L’Occitane’s U.S. operation has filed for a voluntary Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of New Jersey.

Stores are still operating and the company hopes to re-negotiate rent with landlords. Despite success in year-over-year growth in online sales, the beauty retailer’s business continues to be impacted by disproportionately high store rent obligations that are no longer tenable. Chapter 11 presented “the necessary path to right-size its brick-and-mortar presence following repeated endeavors to engage with its landlords to address unmanageable store lease terms,” the company said in a statement. The company’s U.S. business accounts for around 10% of core L’Occitane brand sales; online channel mix is around 59% of sales.

Currently L’Occitane is looking to implement a store footprint optimization plan, including the contemplated exit of unprofitable locations. The filing does not include the L’Occitane en Provence brand or any operations outside the U.S. Parent company L’Occitane International S.A., or any other Group subsidiaries.

“Today’s action is a pivotal step forward in achieving the full potential of L’Occitane’s U.S. business,” said Yann Tanini, Managing Director of L’Occitane North America. “Over the past year, we have moved aggressively to address COVID-related challenges head on, developing innovative new ways to connect with our community and continue to deliver the extraordinary L’Occitane beauty experience that our customers know and love, all while accelerating the essential transformation of our store footprint already underway. We look forward to working collaboratively with our landlords to achieve partnerships that make economic sense in this current retail environment and best position our marquee brand’s boutique offering for years to come.”

L’Occitane reported 4% growth in sales for the third quarter of 2021, or a 1% decline at reported rates. Core L’Occitane brand reported a 3% increase in sales in for the quarter versus a decline of 4% in the second quarter. Apart from strong performance from Elemis, the performance of L’Occitane brand is also encouraging. For fiscal year 2021, it expects a 5% decline in sales, mainly due to the recent lockdowns in Europe and in the U.S.