Published 15:45 IST, September 30th 2019
Forever 21 files for Chapter 11 bankruptcy, to shut 350 stores
Fashion retailer Forever 21 filed for Chapter 11 bankruptcy and said that it is planning to exit from most international locations in Asia and Europe.
Advertisement
Fashion retailer Forever 21 said on September 30 that it has plans to exit from most international locations in Asia and Europe and confirmed to continue its operations in Mexico and Latin America. The fashion retailer has filed for Chapter 11 bankruptcy protection in the US. It expects to shut around 350 stores worldwide which includes 178 US stores, according to its spokesperson. Forever 21 deals with affordable trendy clothes and accessories and competes with brands like Zara and H&M. The company also faced stiff competition from its online rivals. 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 to fully stop operations in Japan
The spokesperson of the fashion brand said that the company is expecting to have between 450 and 500 stores globally after this process, a sharp decline from its current total of about 800. Forever 21 has declared last week that it would fully stop its operations in Japan due to very slow and inactive sales. The California based firm has said it is looking forward to closing as many as 178 stores across the US and has provided little information on other markets. The company's spokesperson further said that the decisions for closing stores at international locations are ongoing and added that they do not want to exit any major markets in the US.
Forever 21 filed for bankruptcy because of changing trends: Neil Saunders
The managing director of GlobalData Retail Neil Saunders said Forever 21 filed for bankruptcy because of both changing trends and tastes within the apparel market. He said that the bankruptcy would not affect any US business and added that most of the stores in Europe are expected to close. "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 U.S."
As part of the Chapter 11 proceedings, the firm says it has obtained $275m (£224m) in financing from existing lenders and $75m in new capital. Linda Chang, executive vice president of the company said it is an important and necessary step taken to secure the future of the company. He said the precautionary measures will enhance to reorganize and reposition the business of Forever 21.
15:13 IST, September 30th 2019