Forever 21 files for Chapter 11 bankruptcy protection
Forever 21, the US-based value fashion giant has fallen victim to its own rapid expansion and changing consumer tastes, and has filed for Chapter 11 bankruptcy protection.
The privately held company, based in Los Angeles, said on Sunday it would close up to 178 stores in the US.
At the point of the bankruptcy filing (a similar process to a CVA in the UK) the company operated about 800 stores globally, including more than 500 stores in the US.
In the UK Forever 21 has stores in Oxford Street in London, Liverpool and Birmingham.
The company said it would focus on maximising the value of its US stores and shut certain international locations.
Forever 21 plans to close most of its locations in Asia and Europe but will continue operating in Mexico and Latin America.
“The decisions as to which domestic stores will be closing are ongoing, pending the outcome of continued conversations with landlords,” it said in the statement.
“We do, however, expect a significant number of these stores will remain open and operate as usual, and we do not expect to exit any major markets in the US.”
So far this year, publicly traded US retailers have announced they will close 8,558 stores and open 3,446, according to the global research firm Coresight Research. That compares with 5,844 closures and 3,258 openings in all of 2018.
Forever 21 was founded in 1984 and, along with other so-called fast fashion chains like H&M and Zara, rode a wave of popularity among young customers that took off in the mid-1990s.
But over the last year or so, fast fashion has begun to fall out of style with some young customers losing interest in throwaway clothes and becoming more interested in buying eco-friendly products. However she online fast fashion players such as Boohoo continue to expand rapidly, as does Inditex-owned Zara, which have both been at the forefront of digitally led shopping.
Forever 21 has also been more vulnerable than some other chains because of its large footprints in major shopping centres, which are attracting fewer shoppers.