Forever 21 used to be popular among teenagers in the 2000s for its affordable and eye-catching designs. However, this big fashion retailer couldn’t cope with high rents in malls and heavy competition as the shift to e-commerce cut a swathe through traditional retailers.
Forever 21 has finally confirmed that they have filed for bankruptcy protection. In an open letter directed to their customer , Forever 21 said they have voluntarily filed for bankruptcy protection under chapter 11 of the U.S. Bankruptcy Code.
CNN Business noted that bankruptcy allows retailers to get out of outstanding leases, reducing the cost of shuttering stores. The company said that it plans to leave open enough stores so that no American markets are entirely left without an outpost of the chain. CNN shares that the company is currently worth $3.4 billion and employees 30,000 people.
Although they have filed for bankruptcy, the fashion retailer stresses that they are not closing down or going out of business.Instead, they said that they will continue operating while working out a plan to pay its creditors and turn around the business.
The retailer has 815 stores in 57 countries. Their next move will be closing down 350 stores worldwide to weed out the unprofitable ones. Out of these 350 stores, 178 of them will be in the U.S while the remaining ones will be from their global stores. Most of their international stores in Asia and Europe will be closed down.
Apparently bankruptcy is another symptom of an ongoing problem with mall retail. As consumers move toward a mix of online shopping and buying locally, chain stores have struggled to stay afloat. Payless, Delia’s, Charlotte Russe, Wet Seal ,American Apparel and Aeropostale have all filed for bankruptcy in the back half of the ’10s with several of those companies shuttering every last one of their stores.
We do not know whether there will be any Forever 21 stores in Malaysia .But definitely, We will miss the bright-yellow shopping bag!
Source: Complex | Bloomberg | CNN Business