The California-based, private and family-held retailer that helped earlier popularize fast fashion in the United States said on Sunday night that it would file for bankruptcy, ceasing operations in 40 countries, including Canada and Japan, as part of a Chapter 11 filing, media reported.
Forever 21 will close up to 178 stores in the United States and up to 350 globally, The New York Times reported. The company will reportedly continue to operate, however, its website and some stores in the United States.
“What we’re hoping to do with this process is just to simplify things so we can get back to doing what we do best”, the chain’s executive vice president Linda Chang said, cited by The New York Times.
Forever 21 was founded in the 1980s in California by a family of migrants from South Korea. The fashion retailer reportedly experienced big success in the early 2000s with its troves of merchandise that imitated of-the-moment designer styles at very low prices.
The company’s core audience was mostly teenage and young women, whose wishes of being trendy reportedly helped the company to expand its chain at a rapid clip over the last decades.
“We went from seven countries to 47 countries within a less-than-six-year time frame and with that came a lot of complexity […] the retail industry is obviously changing — there has been a softening of mall traffic and sales are shifting more to online”, Chang said, cited by The New York Times.
According to the media report, the company employs about 32,800 people, down from 43,000 in 2016. The fashion retailer reportedly saw its revenue drop to $3.3 billion last year, down from $4.4 billion in 2016. Forever 21 expects that restructuring the company would bring in $2.5 billion in annual sales, The New York Times said.
Notably, the retailer – which reportedly did not pay rent on its stores in September in order to preserve capital – believes it can renegotiate many of the leases on its United States stores after the bankruptcy filing, The New York Times said.