Forever 21 Files For Bankruptcy
Forever 21 Bankruptcy: Forever 21 has filed for the Chapter 11 protection of bankruptcy.
Chapter 11 protection postpones a US company’s obligations to its creditors, giving it time to reorganize its debts or sell parts of the business.
Forever 21 sells inexpensive, trendy clothes and accessories, and competes against brands such as Zara and H&M.
Analysts have however said, that the retailer, founded in 1984, has lost its way over the past five years, and fallen out of favor with young US shoppers looking for relatively cheap clothing.
Shoppers are said to continue to pick the online shopping experience over the traditional mall trek.
Neil Saunders, managing director of GlobalData Retail, said:
“The entry of Forever 21 into Chapter 11 bankruptcy is a consequence of both changing trends and tastes within the apparel market and of missteps by the company.”
It is expected, they will close up to 350 stores worldwide. This will include about 178 US stores.
They however, plan to operate in Mexico and Latin America.
After this downsizing, the number of stores are expected to be around 400 and 500 globally. This is a far cry from its previous 800 stores.
According to the company, they are still having meetings with landlords to determine which stores will be closing.
They are however, expecting a significant number of the stores to be open and operate as usual.
They aren’t planning to exit any of the major markets in the U.S.
“We are confident this is the right path for the long-term health of our business.
Once we complete a reorganization, Forever 21 will be a stronger, more viable company that is better positioned to prosper for years to come.”