It seems like Forever 21 will not remain forever. The one-stop-shop for teen’s clothing has filed for Chapter 11 bankruptcy on Sunday. Reportedly, the emporium has suffered due to its own rapid growth as well as changing preferences of customers. The Los Angeles based private company has announced the closure of around 178 shops. Once upon a time, the company had opened more than 800 stores in 57 nations. Even more, the clothing company had obtained more than $300 million to accelerate restructuring. As per a press release, the company has borrowed $75 million from TPG Sixth Street Partners and $275 million from JPMorgan Chase & Co.
Linda Chang, Forever 21’s executive VP, said it was a crucial and essential step for making a safe future for the company. She added the move would assist them in revamping the business and back hitch the company. Under its re-structuring campaign, the company intends to exit most of its international regions in Europe and Asia. As per Forever 21’s statement, it will continue to function in Latin America and Mexico. The company said it expects a wide range of its store across the U.S. will stay open and business as usual. Notably, the clothing chain does not plan to depart the enormous market of the U.S.
The court filing in the U.S. Bankruptcy Court for the District of Delaware reveals Forever 21 has listed resources and obligations between $1-10 billion. Now Forever 21 has joined the fleet of brick-and-mortar businesses who have faced a massive fall due to online sale and e-business. Thus it is the latest retailer which has experienced difficulties between the increasing era of online shopping. Even more, e-commerce companies have attracted all the traffic from malls and traditional stores. Apart from this, increased charges and rent costs have become a pressurized and stressed conventional dealers. As a result, many retailers have shuttered stores, and some have filed for bankruptcy.