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Snuffing Out Sephora

French cosmetics and fragrance retailer Sephora is going AWOL from its Rockefeller Center store. On August 31, its lease on the three-level, 21,000-sq.-ft. space will be assigned to Façonnable, which is moving from a smaller store at Fifth Avenue and 54th Street. Although the swap marks a successful expansion for the French clothier, Sephora's departure intimates an irrationally exuberant expansion.

Sephora has stated publicly that its Rockefeller Center location did not meet operating targets, and that it is focusing on smaller-scale shopping experiences. Also, according to retail broker Faith Hope Consolo, vice chairman of Garrick-Aug Worldwide, the store's multi-level structure "just didn't work. Beauty is almost impulse buying, people run in and run out. It does better on one level where you can see everything."

Wendy Liebmann, president of WSL Strategic Retail, remarks that the Rockefeller Center neighborhood is full of department stores that include full-service cosmetics sections, and so, with a presence nearby, Sephora was "putting the line in the sand, saying here we are."

Such oversaturation is, more generally, a symptom of Sephora's own overexpansion. "They were very aggressive, they were moving very quickly. I wouldn't say they made stupid deals, but they made too many deals at once," Consolo says. And Liebmann explains, "I think that consumers continue to be drawn to the specialty beauty experience, rather than beauty as part of another shopping experience. It's very tempting to go wildly out and expand."

Sephora was acquired by LVMH Moet Hennessy in 1997 and opened its first U.S. store in 1998. It now has more than 70 stores nationwide, 7 of which are located in New York City. Although Sephora would not confirm whether more store closures loom ahead, LVMH's entire retail division has been nosediving.

Prior to opening its first U.S. store in 1993, the Façonnable line was sold exclusively by parent company Nordstrom. In addition to its New York location, the apparel maker has stores in Beverly Hills, Costa Mesa, Calif., and Dallas, and another opening in Coral Gables, Fla. in September.

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