Furla USA, the American subsidiary of the renowned Italian luxury brand Furla, has taken the step of filing for Chapter 11 bankruptcy as a result of the significant impact caused by the Covid-19 pandemic. However, rather than exiting the U.S. market permanently, Furla intends to revamp its operations in order to set itself up for future growth.

Elena Moncigoli, the CEO of Furla USA, emphasized in court documents that while the company believes its core business model is robust and foresees an increase in sales volume as the pandemic subsides, the uncertain duration of the crisis and its long-term economic effects make it unlikely for the company to swiftly return to pre-pandemic sales levels. For this reason, Furla USA has initiated bankruptcy proceedings with the aim of reorganizing its financials and protecting the interests of all stakeholders.

The bankruptcy filings shed light on the factors contributing to Furla USA’s decision. The company had already experienced a decline in foot traffic in its stores, which was further worsened by the pandemic. In March, Furla had to temporarily shutter its U.S. retail locations, and upon reopening, foot traffic remained considerably reduced. Of the 14 stores that Furla operates in the country, eight are outlets. Particularly impacted were the locations in Indianapolis and Boston, both of which heavily depend on local shoppers rather than tourist business.

As part of the bankruptcy proceedings, Furla USA plans to permanently close four physical stores. These brick-and-mortar outlets accounted for $22 million, or almost 60%, of the company’s net sales in the previous year. Wholesale revenues made up $13 million, representing 35% of the total, while e-commerce sales amounted to $2.8 million, constituting a mere 7% of the company’s revenues. It is evident that Furla heavily relies on its physical retail and wholesale businesses, both of which were severely impacted by the pandemic-induced closures.

Aside from store closures and negotiations with landlords, Furla USA was forced to furlough 90 employees when the coronavirus outbreak first hit. At the time, this constituted the majority of its workforce. Currently, the company employs 34 individuals on a full-time basis and 17 part-time employees. Prior to the pandemic, Furla USA had already implemented cost-cutting measures by focusing on enhancing its e-commerce capabilities and expanding its wholesale network. These efforts are expected to remain pivotal for the company’s future plans.

Founded in Bologna, Italy in 1927, Furla ventured into the U.S. market in 1989. The brand currently operates approximately 500 stores worldwide. Despite the challenges faced in the U.S. market as a result of the pandemic, Furla remains committed to restructuring its operations and positioning itself for growth in the future.

Useful links:
1. Furla official website
2. US Bankruptcy Basics