Forever 21 files for Chapter 11 bankruptcy, plans to shut 178 stores
Category: #retail  By Pankaj Singh  Date: 2019-09-30
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Forever 21 files for Chapter 11 bankruptcy, plans to shut 178 stores

With the growing popularities of different types of clothing trends like hoodies, denim and T-shirts, clothing companies have to stay up to date on the latest styles, in order to be in the game. However, while concentrating on this aspect of the industry, many companies have overlooked or failed to optimally leverage the inherent potential of ecommerce. Online shopping has significantly cut traffic at malls as well as brick-and-mortar stores, which has led to winding up of many companies.   

Forever 21, an American clothing brand, also had to undergo a similar situation, the clothing company recently announced that it has filed for Chapter 11 bankruptcy.

According to reliable sources, the chain is also set to file for a motion where it would close at least 178 stores. In a recent statement, the company stated that the conversations with the landlord are still pending, which is why the company’s decision on which stores to close is still pending. However, the company hopes that a huge number of these stores would still stay open and continue business as usual, while still maintaining its presence in the major markets of the U.S.

Reportedly, the capability to get out of rents and shut down at a lower price is an essential advantage that the bankruptcy procedure affords to vendors.

Speaking on the move, Linda Chang, Executive Vice President, Forever21 stated that it is a necessary and important step to protect the future of the firm, which will help the company to restructure its business while repositioning its brand.

Moreover, the company is the latest vendor to run into trouble due to the growing popularity of online stores that have significantly reduced the traffic in traditional brick-and-mortar stores and malls. Additionally increasing rent costs and high debt levels have been a trouble for years.

In fact, over the past decade, even profitable retailers have shut down their stores in order to maintain its margin while the struggling ones chose to file for bankruptcy.

The clothing brand seems to have the same plan for its Japanese market too. Recently, the brand announced that it will shut all of its 14 stores in the nation and pull the plug on its online shop by October end. The move was focused on reducing its losses while the competition with its competitors intensified.

Source Credit: https://edition.cnn.com/2019/09/29/business/forever-21-bankruptcy/index.html



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Pankaj Singh

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Pankaj Singh

Pankaj Singh Develops content for Market Size Forecasters, Algosonline, and a couple of other platforms. A Post Graduate in Management by qualification, he worked as an underwriter in the UK insurance domain before deciding to switch his field of profession. With exp...

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