Furla USA Files Chapter 11 Plan of Reorganization for the Americas
MILAN — After a little more than a month, Furla USA has stabilized its operations in the Americas.
The accessories company on Tuesday submitted its Chapter 11 Plan of Reorganization to the Court of New York. The court is expected to hold a hearing on approval of the plan on Jan. 28. The plan enables Furla USA to exit Chapter 11 swiftly.
“It was all very fast and smooth,” Furla’s president Giovanna Furlanetto told WWD in an exclusive interview. “There was no secured or bank debt, so the judge found our project credible and respectful of the requirements.” Furla USA has unsecured obligations that arise from payments owed to creditors including the Bologna, Italy-based parent.
As reported, Furla USA filed a filed a voluntary petition for relief under Chapter 11 on Nov. 6. This was made in the wake of the coronavirus pandemic and the lockdown, which forced Furla to temporarily shut its retail operations in March. Reduced traffic caused by the health emergency also impacted the performance of the existing stores.
Furlanetto was pleased that the company had “achieved virtually all of its internal goals,” and said she expected Furla to emerge as “a stronger company” after this reorganization. There was never any intention to exit the American market, she noted.
As per the plan, Furla USA has decided to close four locations out of 14 retail and outlet locations operated and directly managed in the U.S. These are the units in Roosevelt Field Mall, Aventura Mall, Copley Place Mall, and Houston Outlet Center.
In light of its business and projected future revenues and profits, the company is in negotiations with remaining landlords and will reveal which locations will remain open by the end of January.
“We had been trying to renegotiate the rents for two years, but our requests were never met,” said Furlanetto, who admitted to the company’s own mistakes, at times accepting to set up shop in the wrong locations. “We will be more careful about the positioning in the future. How one is positioned in a mall is fundamental.”
The company entered the U.S. market in 1989. The U.S. represented 7 percent of Furla’s 2019 revenues.
The U.S. company’s net sales in 2019 were made up of mostly revenues from its physical retail business, which accounted for nearly 60 percent of its net sales last year, followed by wholesale and e-commerce, according to its filings. In 2019, brick-and-mortar net sales were roughly $22 million, while its wholesale net sales were roughly $13 million, or 35 percent of net sales. Online sales last year were about $2.8 million, about 7 percent of net sales, the company said.
Furla group sales in the 12 months ended Dec. 31 were flat compared with 2018, totaling 502 million euros, reclassified according to the IFRS accounting principles. In 2018, revenues amounted to 513 million euros, but reclassified they totaled 504 million euros. Earlier this year, chief executive officer Alberto Camerlengo said the company voluntarily cut back on 18 million euros in revenues by slashing sales derived from the gray market as part of a repositioning strategy set in motion by Furla.
Just how significant the American market is for Furla is also reflected by Furlanetto’s decision to keep operating the brand’s flagship on Fifth Avenue in New York, “although the rent reflects the traffic from 10 years ago, and despite the problems caused by being so close to the Trump Tower, but we are near St. Patrick’s Cathedral, it’s the most prestigious venue.” So much so, that she is mulling the idea of refurbishing it modeled after the new store concept and blueprint introduced in Milan in September.
Furlanetto was very pleased with the brand’s online business and in outlets, which point to Furla’s “ongoing attractiveness and superior quality compared to our competitors.” Furla bags are produced in Italy.
Furla was founded by the Furlanetto family over 90 years ago in Bologna, and the company has more than 500 monobrand stores worldwide.
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