One of the most popular teenage clothing emporium that rode America’s mall boom and bust, Forever 21 has filed for bankruptcy.
The company is closing between 300 and 350 stores worldwide and 178 alone in the United States. The chain said it is planning to overhaul its global business. They’re also planning to exit “most of its international locations in Asia and Europe”. Forever 21 currently has 549 US stores and 251 in other countries, will continue to operate in Mexico and Latin America according to CNN Business.
The company released a letter to consumer on Sunday night and the said that decisions about which US stores would close were continuing, “penning the outcome of continued conversations with landlords.”
“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,” the company said.
The ability to get out of leases and close stores at lower cost is key-advantage that the bankruptcy process affords to retailers.
Executive Vice President, Linda Chang said in a news release that filling for Chapter 11 bankruptcy is “an important and necessary step to secure the future of our Company, which will enable us to reorganize our business and reposition Forever 21.”
Forever 21 also said it has obtained $275 million in financing from JPMorgan Chase (JPM), as well as $75 million in new capital from TPG Sixth Partners that would allow it to operate “in a business as usual manner” during the restructuring. Its Canadian subsidiary has also been granted protection from creditors.
The retailer is just the latest to run into trouble amid the rise of online shopping that has cut foot traffic to malls and brick-and-mortar stores. High debt levels and rent costs have also burdened traditional retailers.