American fashion retailer Forever 21 is preparing to file for bankruptcy.
The company expects that this will help close stores in inefficient locations, as well as restructure the business. According to expert estimates, last year the brand's sales decreased by 20-25%.
Last week shareholders of Forever 21 engaged consultants for debt restructuring and review of its portfolio, which includes 815 stores located in the US and Canada, Europe and Asia - a total of 57 countries. Previously, Forever 21 held a series of negotiations for additional funding, but no suitable options were found. Experts agree that bankruptcy is the most likely scenario for the retailer's business.
The brand was founded in 1984 by South Koreans Jin Suk and Do Won Chang. As a result of the crisis in the US retail market in 2019, the couple lost almost half of their fortune, which decreased to $1.6 billion.
Analysts note that Forever 21 is one of the leading tenants of shopping and entertainment centers across the country. In the event of bankruptcy and massive store closures, American malls, which are experiencing problems with filling and attracting traffic, may be even more hit. In 2019 alone, US retailers announced more than 8,000 store closures in total.
At the beginning of 2019, the Payless shoe chain announced bankruptcy and the closure of all 2,500 retail stores. Among the fast fashion brands that have gone bankrupt over the past five years are Wet Seal, American Apparel and Delia's, as well as the Aeropostale brand, which has retained part of its stores. As for Forever 21, it has been one of the fastest growing brands in the youth fashion market in recent years. Back in 2016, the network was actively developing despite the problems of the main competitors in the market. But quietly, the brand began to reduce space in the US market and close international stores.