Forever 21 Inc. has filed for bankruptcy protection, the latest big fashion merchant who couldn’t cope with high rents and heavy competition as the shift to e-commerce cut a swathe through traditional retailers.
The Chapter 11 filing in Wilmington, Delaware, allows the Los Angeles-based company to keep operating while it works out a plan to shut unprofitable stores in the U.S., pay its creditors and turn around the business. Forever 21 operates about 800 stores in the US, Europe, Asia and Latin America.
Once popular among teenagers in the 2000s for its affordable but eye-catching designs, Forever 21’s signature bright-yellow shopping bags have become a rarer sight as Generation Z consumers — those born from 1998 onwards — shifted rapidly over to e-commerce and streetwear brands in recent years. The bankruptcy filing could help Forever 21 get rid of unprofitable stores and raise fresh funds, allowing the private, family-held company to restructure its flailing business for a new generation.
Forever 21 has obtained $275 million in financing from lend.ers with JPMorgan Chase & Co. as agent, as well as $75 million in new capital from TPG Sixth Street Partners and its affiliated funds. It plans to exit most of its international locations in Asia and Europe, but will continue operations in Mexico and Latin America. The stores expect to.. Bloomberg