Forever 21 Files for Bankruptcy, Closing Hundreds of Stores
The staple mall brand will be closing 178 locations in the United States
Fans of Forever 21 will be seeing fewer of its iconic storefronts.
On Sunday, the popular fashion retailer filed for Chapter 11 bankruptcy protection, according to a press release, and announced it would be closing 178 locations in the United States and nearly 350 overall, The New York Times reported.
“This was an important and necessary step to secure the future of our Company, which will enable us to reorganize our business and reposition Forever 21,” Executive Vice President of Forever 21, Linda Chang, said in a statement. Her parents, Do Won and Jin Sook Chang, founded Forever 21 in 1984 after immigrating to California from South Korea, and still run the franchise.
The company also plans to stop operations in 40 countries, including Canada and Japan, as part of the filing. However, they will continue running its website, as e-commerce makes up 16 percent of the company’s revenue.
“What we’re hoping to do with this process is just to simplify things so we can get back to doing what we do best,” Chang told the NYT.
Forever 21 received $275 million from JP Morgan Chase and $75 million from TPG Sixth Street Partners to “operate in a business as usual manner” as they move forward with restructuring the company, according to Forever 21’s press release.
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After it was first founded by Chang’s parents in the ’80s, Forever 21 quickly rose in popularity among young consumers who were drawn in by fast, disposable fashion at affordable prices. However, the company expanded too quickly as technology began to influence and change the retail industry.
“We went from seven countries to 47 countries within a less-than-six-year time frame and with that came a lot of complexity,” Chang told the NYT, adding “the retail industry is obviously changing — there has been a softening of mall traffic and sales are shifting more to online.”
This is just the latest staple mall brand to suffer from poor sales. Other beloved stores to declare bankruptcy within the past few years include Charlotte Russe, popular accessories brand Claire’s, shoe store Payless, women’s apparel line Bebe and kids’ clothing boutique Gymboree.
Forever 21’s bankruptcy filing also highlights the rise of sustainable fashion brands among the new generation of consumers, according to CBS.