Many beauty and fitness companies on the brink of bankruptcy

Many beauty and fitness businesses have long since lost liquidity and are on the brink of bankruptcy, according to lawyers specialising in restructuring processes. At the end of 2020, the debts of hair and beauty establishments reached PLN 49 million.
According to experts, the new sanitary regime and further restrictions on businesses have hit fitness clubs and gyms particularly hard, which have been in lockdown almost since the first days of the announcement of the coronavirus pandemic in Poland. Cosmetic and hairdressing salons are also in a particularly difficult situation, having once again been completely closed to customers during the ongoing pandemic and thus deprived of any source of income.

"While restaurants or hotels can at least partially patch up their badly strained finances, the cosmetics and fitness industry are completely cut off from earnings in the event of a lockdown. As a consequence, their financial situation deteriorates extremely quickly and companies have to react immediately in the face of extremely difficult circumstances," pointed out legal advisor at the FKK law firm Aleksandra Pakuła, in a release published on Tuesday.

As she pointed out, the dire situation in the beauty industry was reported at the end of March by the management of the Polish Association of the Cosmetics Industry, which indicated that even before lockdown, hair and beauty salons were visited by only around 40-70 per cent of the people who had turned up in them before the pandemic. In the aftermath, the sector's annual turnover fell by at least 30 per cent, which in many companies meant layoffs and the threat of bankruptcy.

According to the president of PMR Restructuring, Małgorzata Anisimowicz, the National Debt Register shows that during the pandemic period, by December 2020 alone, the debts of hairdressing and cosmetic establishments increased by 30 per cent to nearly PLN 49 million. "Today, they are certainly much higher, and each consecutive week of lockdown can disastrously affect the situation of companies in this sector," she pointed out.

Small and medium-sized enterprises are particularly hard hit, she added. "Currently, it is difficult to find a Court and Economic Monitor without at least a few entries concerning entrepreneurs running hairdressing or cosmetics establishments," she reported.

Due to an increase in the incidence of Covid-19 in Poland, cosmetic and hairdressing establishments, gyms and fitness clubs, among others, have been closed nationwide since Saturday 20 March. The restrictions are in force until 18 April. (PAP)

Małgorzata Anisimowicz - a qualified restructuring advisor and President of the Management Board of PMR Restructurings - provided a commentary for a publication on Forsal.pl's socio-economic website.

The article appeared on forsal.pl:13 April 2021. We invite you to read the full version:" Many beauty and fitness companies on the brink of bankruptcy