Fashion retail giant Forever 21 has filed Chapter 11 bankruptcy in an effort to restructure its organization.
Headquartered in Los Angeles, CA, the company will close its international stores in Asia and Europe, leaving locations in Mexico and Latin America open. Forever 21 will close up to 178 stores in the U.S.
“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,” Linda Chang, Executive Vice President of Forever 21, Inc., said in a statement.
JPMorgan and TPG Sixth Street Partners will be financing Forever 21 with $350M intended to keep the remaining open stores operating to honor returns, gift cards, reimbursements, exchanges and purchases. “The financing provided by JPMorgan and TPG Sixth Street Partners will arm Forever 21 with the capital necessary 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. With support from our key landlord and vendor constituents, we are confident we will emerge as a stronger, more competitive enterprise that is better positioned to prosper for years to come, and we remain committed to delivering the fast fashion trends that our customers have come to expect from Forever 21,” Chang added.
Forever 21 was founded in 1984 and became a major shopping destination for the youth because of its affordable prices and trendy clothing. However, the competition of online vendors, such as Amazon, Fashion Nova and Zara, has made it difficult for many brick-and-mortar stores to thrive.
The bankruptcy filing does not necessarily mean that Forever 21 will no longer exist. It just means that the company has to prune off some of the access weight and adjust its business strategy in order to come back stronger and better.
