Forever 21 files for bankruptcy

Forever 21, the teenage clothing emporium, has filed for bankruptcy.

Forever 21 store in the Westfield Mall

Grace Mercer

Forever 21 store in the Westfield Mall

Grace Mercer, Staff Reporter

Fashion retailer, Forever 21, announced it has filed for bankruptcy protection in order to restructure its business. Some of the Forever 21 stores closed not only in the US, but also in countries such as Europe and Asia. In total, the company is closing 300 to 350 stores, and as many as 178 of those stores are in the United States.

The company sent a letter to customers about the shut down of certain stores. The ability to get out of the way of leases and close the stores at lower prices is what the company is aiming for by filing for bankruptcy.

“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 US,” the company said.

In recent years, even financially healthy retailers have closed their stores, and the struggling retailers have filed for bankruptcy. Forever 21 has obtained large amounts of money from other companies such as JP Morgan, Chase, and TPG Sixth Street Partners that allow them to operate under their regular schedule. High debt levels and rent costs have also burdened the retailers.

“Retailers relying on debt to finance their growth has always been particularly susceptible to slowdowns,” said Greg Portell, lead partner in the global consumer.

While Forever 21 is closing stores everywhere, there has been a rise in online shopping. Young shoppers have migrated to sites such as Fashion Nova, Asos, Boohoo, and Missguided, as well as e-commerce giant, Amazon, and clothing resellers such as Poshmark and Depop.

The stores of Forever 21 are still scattered around different malls and shopping centers. While many retailers have run into trouble after being purchased by private equity firms or hedge funds after piling on debt, Forever 21 is still owned by its founders.