Candy Seller It’Sugar Files Bankruptcy After Pandemic Sales Drop
(Bloomberg) -- Candy store chain It’Sugar LLC filed for Chapter 11 bankruptcy protection Tuesday, unable to weather a pandemic-related sales slump without rent relief from its landlords.
The company, owned by BBX Capital Corp., was forced to shutter its approximately 100 locations in March in response to the Covid-19 pandemic, the company said in a statement. It reopened stores in June and July, but got neither the sales lift nor the concessions from vendors and landlords it needed to stay afloat.
“The effects of the Covid-19 pandemic on demand, sales levels, and consumer behavior, as well as the recessionary economic environment, have had a material adverse effect on It’Sugar’s business, results of operations and financial condition,” BBX Capital President Jarett Levan said in the statement.
A Chapter 11 filing allows a company to continue operating while it reworks its obligations and closes underperforming stores. It’Sugar sought protection in the U.S. Bankruptcy Court for the Southern District of Florida, listing assets and liabilities of up to $10 million each, according to court papers. The company said in the statement that a unit of BBX would provide it with financing to keep stores open during the bankruptcy process.
The chain was long dependent on tourism to drive sales of its giant gummy bears and candy gift boxes. Roughly 60% of the Boca Raton, Florida-based It’Sugar’s annual sales were tied to travel, according to the statement. It operates stores in tourist hotspots like San Francisco’s Fisherman’s Wharf and Las Vegas, along with locations in malls and other shopping centers.
It’Sugar said it stopped paying rent, or has made only partial payments on its stores when the pandemic took hold in the U.S. It’s been negotiating with landlords for rent deferrals and abatements but has received default notices for 49 of its shops, according to the statement. Sales at the stores were around $3.6 million in the three months through June, handing the company an $8.4 million loss before taxes.
It’Sugar was founded in Atlantic City, New Jersey in 2006 by Chief Executive Officer Jeff Rubin, who built the company after creating a sweets business for F.A.O. Schwartz and co-founding Dylan’s Candy Bar. Since then, the retailer has sold novelty items such as five-pound gummy bears and, with the onset of Covid-19, candy-scented hand sanitizer.
The case is It’Sugar LLC, 20-20261, U.S. Bankruptcy Court for the Southern District of Florida. To view the docket on Bloomberg Law, click here.
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