Another one bites the dust! Women’s clothing retailer Forever 21 is reportedly planning to file for bankruptcy protection. According to Bloomberg, Forever 21 hired a team of advisers to help consolidate and restructure their debt, and discuss additional financing; however, negotiations with possible lenders have been stalled.
Filing for Chapter 11 bankruptcy protection usually involves store closures as retailers look to cut costs on money-losing stores. But for Forever, the goal is to create a reorganized and often-smaller company that can begin with a fresh start.
Chairman of the bankruptcy department at New York-based law firm Wilk Auslander, Eric Snyder, said, “With 815 stores, many in undesirable malls, a bankruptcy filing gives Forever 21 the leverage to either renegotiate rents, which landlords are more than willing to do in this retail environment, or reject leases and free itself of liability for unprofitable stores.”
USA Today reports a wave of recent bankruptcies and store closing announcements, such as luxury retailer Barneys New York, who announced their filing for bankruptcy and the closure of 15 out of its 22 locations.
Last month, jewelry and accessories retailer Charming Charlie file and announced it will close its 261 stores, and on August 16 plus-size retailer The Avenue filed for Chapter 11 August 16 and will close all of its 222 locations.
The “retail apocalypse” is the threatening term used to describe how the internet has changed consumers’ shopping habits, especially brick and mortar stores. Since 2017, decades-old American businesses like Sears, Toys R Us, and Payless amongst others have all filed for bankruptcy. Even inexpensive teen fashion stores like Claire’s, Charlotte Russe, and PacSun have found themselves in bankruptcy court.
Fashion e-commerce hubs, like Fashion Nova, ASOS, and Missguided, are competing to be the new fashion go-to retailers; boasting cheap prices, trendy styles, and aggressive social media campaigns.