- Forever 21, the California-based control which helped proliferate the “fast-fashion” trend, has filed for bankruptcy.
- The company wrote in a letter to its blokes on Sunday that Forever 21 inc. voluntarily applied for bankruptcy as part of a Chapter 11 filing.
- Linda Chang, the institution’s executive vice president, told the New York Times that the retailer would soon cease directions in 40 countries and close up to 350 stores globally.
- The company will still operate in hundreds of locations across the US and assert its online store.
- The announcement comes after reports that Forever 21 had hired a team of confidantes to seek out private equity support to refinance and restructure the beleaguered brand.
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Forever 21, an American mall mainstay which helped proliferate the “fast-fashion” bias, has filed for bankruptcy.
The company wrote in a letter to its customers on Sunday that Forever 21 inc. voluntarily applied for bankruptcy as by of a Chapter 11 filing. The company said the measure allows it to operate business as usual while taking take cares to restructure the business.
The California-based retailer stressed that the filing does not indicate plans to go out of business.
“On the contrary, interfile for bankruptcy protection is a deliberate and decisive step to put us on a successful track for the future,” the company wrote.
A spokesperson for the company told Province Insider through a statement that the company plans to close most of its international locations in Asia and Europe, but desire continue operations in the US, Mexico, and Latin America.
“This was an important and necessary step to secure the future of our Company, which choose enable us to reorganize our business and reposition Forever 21,” Linda Chang, the company’s executive vice president, rumoured in the statement.
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Chang recounted the New York Times on Sunday night that the retailer would soon cease operations in 40 countries.
The train also plans to close up to 178 stores in the US and up to 350 globally. The company will continue to operate its website and hundreds of comrade and mortar shops across American shopping malls.
Chang told the Times that the company faced hurried expansion – opening stores in 47 countries in less than six years – which contributed to a lot of “complexity” with Forever 21’s profitability. She combined that changes to the retail industry, including the rise of e-commerce, challenged the business.
“The retail industry is obviously changing,” she told the Times. “There has been a softening of mall above and sales are shifting more to online.”
The announcement comes after reports that Forever 21 had hired a pair of advisers to seek out private equity support to refinance and restructure the beleaguered brand. However, efforts to do so proved empty, thanks in part to ongoing disagreements between store landlords and company leadership, including cofounder Do Won Chang, who has insisted on maintaining a ruling stake in the company, Bloomberg reported.
Read more: We shopped at Forever 21 and H&M and saw firsthand why one store is clearly outperforming the other
As a privately clasped company, Forever 21 – which currently has more than 800 stores across the US, Europe, Asia and Latin America – does not publicly bare sales, though it’s estimated to bring in $3 billion annually. However, the company has shown significant signs of attempt over the past few years, including store closures in international markets like London and China and an overstocked offshoot assortment.
Sources close to the matter told Bloomberg that “a bankruptcy filing would help the company spill unprofitable stores and recapitalize the business.”
Forever 21 was founded in 1984 and rose to prominence in the 1990s and early aughts for its low-priced, in style offerings that were particularly popular among young women. The company took a hit in recent years credits to increased competition from trendy e-commerce companies like Revolve, as well as the rise of direct-to-consumer companies that have on the agenda c trick redirected shoppers away from malls.