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Forever 21 to close 200 stores amid bankruptcy proceedings

04
Nov '19
Pic: Shutterstock
Pic: Shutterstock
Forever 21 will close 200 stores as part of its restructuring after filing for bankruptcy in September in the US bankruptcy court for Delaware. This will result in a smaller footprint of the fast-fashion chain to help it emerge from Chapter 11—a form of bankruptcy that involves a reorganisation of a debtor's business affairs, debts and assets.

Expensive store leases, unprofitable markets and the impact from online shopping had adversely affected the clothing retailer.

Forever 21 leases almost all its retail stores—it has 549 stores in the United States and 251 in other countries.

Many Forever 21 stores are in malls, and the decline in mall foot traffic has led to a decrease in sales through what has traditionally been the company's predominant retail channel, according to US media reports.

Despite the company's efforts to adjust its sales strategy to online sales, it remains saddled with excessive floor space from leases entered a decade ago or more ago in unprofitable markets.

Forever 21 plans to exit most international markets, including Canada, Europe and Asia, emerging from bankruptcy as a leaner company focused on a smaller store base in the United States, Mexico and Latin America.

Fibre2Fashion News Desk (DS)


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