The teenage clothing powerhouse Forever 21 has filed for bankruptcy.
According to CNN, the chain said it’s planning to overhaul the global business, closing between 300 and 350 stores, including as many as 178 in the United States. In addition to “most of its international locations in Asia and Europe.” Already having 549 U.S. stores and 251 in other countries, F21 will continue to operate in Mexico and Latin America.
The company wrote a letter to customers Sunday night, sharing the decisions about which US stores would close, and which were continuing, “pending the outcome of continued conversations with landlords.”
“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 clarified.
Executive vice president Linda Chang said in a news release that filing for Chapter 11 bankruptcy is “an important and necessary step to secure the future of our Company, which will enable us to reorganize our business and reposition Forever 21.”
Forever 21 said it has gathered $275 million in financing from JPMorgan Chase, as well as $75 million in new capital from TPG Sixth Street Partners that would allow it to operate “in a business as usual manner” during the restructuring. Its Canadian subsidiary has also been granted protection from creditors the reports say.
Forever 21 is just the latest to get into trouble as online shopping rose, cutting off traffic at malls and standstill stores. In recent years, even healthy retailers have closed stores and struggling ones have filed for bankruptcy.
Traditional brick-and-mortar retailers have struggled in recent years due to shorter fashion cycles and buyers, of all ages, switching to the online experience.
In just the past five years, Wet Seal, American Apparel and Delia’s filed for bankruptcy and closed all their stores. Aeropostale filed for bankruptcy in 2016, however, they, along with Charlotte Russe who filed for bankruptcy this year, have been able to keep some stores open.
“The combination of fast fashion and accelerating supply chain speeds have exacerbated that risk by increasing the chances that a retailer reads the trends wrong and misses multiple trend cycles,” Greg Portell, lead partner in the global consumer and retail practice of retail consulting firm A.T. Kearney said to CNN.
Forever 21 has built massive stores, like its four-story flagship in New York’s Times Square, which happens to be a 90,000 square feet store with 151 fitting rooms. Over the last few years, many retailers started minimizing their network of stores in recent years, but Forever 21 kept adding stores as recently as 2016.