Forever 21 Has Officially Filed For Bankruptcy
The brand plans to close up to 178 stores in the U.S. and halt operations in 40 countries.
UPDATE, 9/30:
Forever 21 officially filed for bankruptcy on Sunday, The New York Times reports. It will close up to 178 stores in the U.S. and up to 350 overall, but will continue to run its website, according to the paper. The company will also cease operations in 40 countries, including Canada and Japan, as a result of the bankruptcy filing.
The fast-fashion franchise is hoping to “simplify things so we can get back to doing what we do best,” Forever 21‘s Executive Vice President Linda Chang told NYT.
ORIGINAL STORY, 8/28:
Forever 21 is reportedly considering filing for bankruptcy as sales decline, sources with knowledge of the plans have told Bloomberg and CNBC. The fast fashion retailer was already negotiating additional financing options and working with advisors to restructure the company’s debt, but those discussions have stalled, according to Bloomberg.
Weeks ago, the outlet reported that Forever 21—which makes an estimated $3 billion per year in sales—was struggling to pay vendors and landlords and was seeking out ways to “revive its business.” By filing for bankruptcy, the brand may be able to “shed unprofitable stores and recapitalize the business,” Bloomberg reports, citing anonymous sources familiar with the negotiations.
At the time of writing, Forever 21 has not announced any plans to close any of its over 800 locations across the U.S. However, as CNBC points out, many of its branches are located in malls, which are seeing fewer shoppers. Similar fast fashion brick-and-mortars are also fighting (and, at times, failing) to keep up with online and or direct-to-consumer brands. The U.K.-based brand TopShop, for example, also recently filed for bankruptcy and closed all of its U.S. stores as a result.
The L.A. Times also projected that Forever 21 lost its “cool factor” and had widened its range of merchandise too broadly. “They’ve lost sight of what brought them there,” Roger Beahm, executive director of the Center for Retail Innovation at Wake Forest University, told the paper in July.
BAZAAR.com has reached out to Forever 21 for comment.
From Harper’s BAZAAR U.S