Forever 21, a teen apparel retailer that expanded aggressively at malls across America as others pulled back, filed for bankruptcy on Sunday evening.
The retailer ended months of speculation about the state of its business by announcing that it is seeking bankruptcy protection under Chapter 11. Forever 21 will look to close up to 178 stores in the U.S. as part of the restructuring, according to a statement from the company. It will also shutter most of its locations in Asia and Europe.
“This was an important and necessary step to secure the future of our company, which will enable us to reorganize our business and reposition Forever 21,” said Linda Chang, executive vice president and one of the founders’ daughters, in a statement.
To continue funding operations during the restructuring, Forever 21 has secured $350 million in financing, which includes $275 million from its existing lender, JPMorgan Chase. It has also obtained $75 million from TPG Sixth Street Partners and its affiliates.
The bankruptcy filing marks a sharp reversal in fortune for the fast fashion giant, which was started in 1984 by a husband-and-wife team who immigrated from South Korea and became a destination for fashion-forward merchandise at bargain basement prices. However, in recent years, sales have slumped as mall traffic declines and young shoppers have gravitated toward online retailers like Asos and Fashion Nova. The company is also saddled with a sprawling brick-and-mortar footprint after years of expanding the number and sheer size of its stores…..[Read More]
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