Lolli & Pops, a boutique US candy store, files for bankruptcy

By Kristine Sherred

- Last updated on GMT

The retailer began suffering as early as 2018, after an expansion plan with a property management group caused rent woes. Pic: flickr/Eden, Janine and Jim
The retailer began suffering as early as 2018, after an expansion plan with a property management group caused rent woes. Pic: flickr/Eden, Janine and Jim

Related tags Retailing Candy Bankruptcy Property Management expansion Shopping mall

As recently as May, the retailer had promoted further expansion in shopping centers under new private equity partners, but it recently shuttered several stores after failing to pay rent.

Lolli and Pops closed its 2018 fiscal year in April with $61m in revenue, but it was operating at a loss of $8.5m in EBITDA – due mainly, it claimed, to ‘significant general overhead expenses.’

The Delaware court filing details the series of rent lapses and fluctuating sales that led to the bankruptcy, including the closure of seven stores in Texas and one in Boise, Idaho. According to the documents, Lolli and Pops owes $7m to First Republic Bank in San Francisco, home to the retailer’s headquarters and real estate firm Brookfield Properties, its private equity partner.

In partnering with the candy store in 2017, Brookfield – which claims to specialize in brand expansion in malls with ‘high foot traffic, loyal shoppers, and engaged community members – opened 40 Lolli and Pops locations. The firm even featured the ‘expansion story’ on its website​ in May.

A bittersweet story

Lolli and Pops launched in 2012 as an experiential candy store offering an assortment of international and nostalgic candies, gummies, truffles, macaroons and cotton candy, according to the court filing. It also carried its own private label line.

As of August 2019, the company operated 69 Lolli and Pops stores in more than 30 states. It also managed 10 Candyopolis stores – all of which closed their doors just before the bankruptcy filing.

Online sales ceased in February, and the company stopped paying rent to certain landlords in April, hoping that the extra cash would cover vendor and staff payments. That plan failed, according to court documents.

Lolli and Pops, which employs nearly 800 people including 80 full-time, salaried employees – pinned some blame on vanishing visitors at shopping malls and ‘seasonal fluctuations.’ It garners the highest volume of sales around the holidays in November and December, as well as Valentine’s Day and Mother’s Day in May.

Candy sales indeed peak around the four major candy holidays, with Halloween and Easter leading the pack with about $3bn each in sales.

According to court documents, the business began to deteriorate in 2018, after an expansion plan required monthly, interest-laden payments to landlords ‘for certain preopening expenses.’

“While the package-deal leases allowed [Lolli and Pops] to open additional stores, the amount owing the landlords negatively affected the profitability of the newly opened stores,”​ said Jeff Nerland, chief restructuring officer for the case.

Nerland approved temporary financing to keep the retailer afloat as it seeks a buyer for bankruptcy protection.

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Salaried perks seem less perky..

Posted by Erica,

Maybe it was a bad idea for their lavish conventions. While it might only have been once a year, I’m sure handing out 24k macaroons to each their store managers during convention week might have cost a pretty penny. Never a consistent plan across the board and each location was run differently. Very unfortunate but if your cleaning standards differ at each location you should already be concerned.

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Live and Learn L&P peeps

Posted by Gerry Morrison,

Sugar only candies is a hard sell, regardless of the locations and story behind the store look and feel....Unique and point of differences is what keeps the consumer hooked...turned down what I offered them a couple years back...that would have been the most unique and profitable confections they passed on carrying. Experience counts and hopefully, you will be the better for it, next go round!

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