Forever 21, the retailer that served as a fast-fashion pioneer has filed for Chapter 11 bankruptcy. The news was announced late Sunday night.
Because Forever 21 is filing for Chapter 11 bankruptcy, rather than Chapter 7, it will be begin the process of undergoing a cost-cutting restructuring to try to save the business, rather than a complete closure. The retailer has secured $275 million to assist in the restructuring, from JPMorgan Chase Bank, an its existing lender and an additional $75 million in new capital from TPG Sixth Street Partners. Currently, Forever 21 operates over 800 stores worldwide, 500 of which are located in the United States.
“The decisions as to which domestic stores will be closing are ongoing, pending the outcome of continued conversations with landlords,” read a statement from the retailer, according to the AP. “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 U.S.”
The news of Forever 21’s filing is not a surprise: Reports of a pending bankruptcy first surfaced at the end of August. Its revenue had decreased to $3.3 billion last year, after hitting $4.4 billion in 2016.
Established in 1984 by Do Won and Jin Sook Chang, who still own the business and whose daughter, Linda Chang, serves as executive vice president, the retailer became a household name in the world of fast fashion, alongside retailers like H&M, Topshop and Zara. Unlike those companies, which originated abroad, Forever 21 is American-owned, based in Los Angeles. It is a privately held company.
The influx of capital will help the brand to “effect critical changes in the U.S. and abroad to revitalize our brand and fuel our growth, allowing us to meet our ongoing obligations to customers, vendors and employees,” said Linda Chang in a statement.
Fast-fashion retailers have suffered in recent years, due to a number of factors: Growing consumer consciousness that has moved away from a “more is more” approach to shopping, American malls, where a large chunk of Forever 21 stores are located, are losing customers, and more and more ecommerce competitors, like Asos, have popped up.
Linda Chang told The New York Times that the hope is to “simplify things so we can get back to doing what we do best.”
Forever 21 is just the latest in a string of American retailers to file for bankruptcy, either Chapter 11 or Chapter 7. Payless ShoeSource and Forever 21 competitor Charlotte Russe both filed for Chapter 7 this year, shuttering completely, while Barneys New York has filed for Chapter 11 and is undergoing restructuring similar to the process Forever 21 will undertake.