Sugarfina Files for Bankruptcy, Closing 6 Stores Immediately
Upscale candy retailer Sugarfina filed for Chapter 11 bankruptcy Friday and will immediately close six of its 44 boutique stores, reports CandyIndustry.com. The brand cited shifts in the retail sector, uncertainty in its international partnerships, and difficulty in controlling margins as reasons for not being profitable, and reports having $26.65 million in debt. Sugarfina began searching for opportunities to obtain a complete or partial acquisition, equity investments or long-term debt transactions months ago, but found no viable options, prompting the candy retailer to file for bankruptcy. A holding company, Candy Cube Holdings, LLC, has made a “stalking horse” bid of $13 million.
Total Retail's Take: The downfall of a once fast-growing brand such as Sugarfina is somewhat surprising, although its rapid expansion of physical storefronts and international efforts proved the brand bit off more than it could chew. Lance Miller, Sugarfina's chief restructuring officer, said in bankruptcy documents that "from 2016 through 2018, the company experienced profitability in its wholesale, corporate and e-commerce channels; however, retail and international channels remained unprofitable." The candy brand also notably launched dozens of unique candy collections, including Super Mario Bros-themed candy cubes, Tito's vodka gummies, Alfred's cold-brew coffee bears, but these partnerships weren't successful enough to ensure profitability. The lesson that other startups, SMBs, and direct-to-consumer brands can learn from Sugarfina? Physical retail is now more than ever a difficult game to play, and win.