The California chain that spawned the "fast fashion" trend and was once one of the fastest growing retailers in the US has filed for bankruptcy.
The company will continue to operate in hundreds of locations across the US, Mexico and Latin America and will continue to support the online store. However, it will cease operations in 40 countries in Europe and Asia, closing up to 350 stores worldwide. Almost two hundred stores will be closed in the United States. According to representatives of Forever 21, such a move will allow the business to continue, while taking all the necessary restructuring steps.
“This was an important and necessary step to secure the future of our company, which will enable us to reorganize our business and transform Forever 21,” said Linda Chang, executive vice president of the company.
The reason for this situation, Linda Chang calls the rapid growth of the company, which over the past 6 years has opened stores in 47 countries around the world, bringing their total number to 8 hundred. This greatly complicated management and negatively affected profitability. Especially against the backdrop of the development of e-commerce, which was not given due attention in Forever 21.
Some time ago, a team of consultants was hired to restructure a struggling brand. However, due to internal disagreements, this did not bring much benefit. Despite the company's annual revenue of up to $3 billion, it constantly ran into problems such as unprofitable stores and unsold inventory.
Brand Forever 21 was founded in 1984 and rose to prominence in the 90s with affordable yet stylish offerings that were especially popular with young women. In recent years, the company has experienced increasing competition from new brands that have been actively developing on the Web, stealing visitors from shopping centers.