Forever 21 Files for Bankruptcy
Another one bites the dust.
Fast fashion brand Forever 21 has stated on Sunday night it’s filing for Chapter 11 bankruptcy, closing 178 brick-n-mortar in the US and 350 overall. The company will exit most international locations in Asia and Europe however will continue its Mexican and Latin American operations. They join a growing list of stores who have taken a fierce hit from the rapidly growing e-commerce competition.
“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,” Forever 21 executive vice president Linda Chang said in a statement.
According to Coresight Research, more than 8,200 store closings were announced this year already exceeding last year’s total of 5,589 stores. This number of retail shutdowns may continue to pile up and reach 12,000 by the end of 2019.
Founded in 1984 in a small Los Angeles store, husband and wife immigrants from South Korea, Do Won Chang and Jin Sook quickly expanded the chain to suburban malls. The retailer catered to young girls inexpensive basics. The fast fashion model offered the latest trends than what was typically offered at department stores at the time.
The chain built massive stores, like its four-story, 90,000-square-foot flagship with 151 fitting rooms in the heart of New York’s Times Square.
Since the start of 2017, more than 20 U.S. retailers, including Sears Holdings Corp (SHLDQ.PK) and Toys ‘R’ Us, have filed for bankruptcy, succumbing to the onslaught of fierce e-commerce competition from Amazon Inc (AMZN.O).
Forbes lists Won and Chang as having a net worth of $1.5 billion, and the privately-held company itself as having annual sales of $3.4 billion and 30,000 employees.