Fashion Chain Forever 21 Files For Bankruptcy, Likely to Shut 178 stores

Forever 21 files for bankruptcy

Only time will tell what the future holds for Forever 21, but for now, we're going to pour one out for the mall store of our high school and college wardrobes. The company employs about 32,800 people, down from 43,000 in 2016.

Forever 21 had announced last week that it would pull out of Japan by October due to "continued sluggish sales". A Forever 21 store is pictured on August 8, 2014 in Chicago, Illinois. PricewaterhouseCoopers Inc. will serve as its monitor in proceedings.

It lists both assets and liabilities in the range of $1 billion to $10 billion, according to the court filing in the U.S. Bankruptcy Court for the District of Delaware.

"Following a thorough review of [Forever 21] Canada's poor performance and negative cash flow..." With landlords on board, that would have likely allowed Do Won to continue the business.

The chain also announced it will close 168 of its 534 American locations after filing for creditor protection in both Canada and the US on Monday.

It will also continue to honour gift cards, and returns and exchange policies will continue as normal.

On its website yesterday, Forever 21 sales included tops that started at US$3 and dresses, handbags and jewellery and trousers for US$20 and under. The letter, which is addressed to Forever 21's customers, explains the filing in simple terms to let its customers know how a chapter 11 bankruptcy filing will impact its day to day operations as a business. The company plans to shutter the majority of its non-U.S. locations except in Mexico and Latin America.

Do you think the retail sector is still a good place to invest?

Overall closures could reach 12,000 this year, indicating a crisis for traditional retailers, according to global research firm Coresight Research. That compares with 5,844 closures and 3,258 openings in all of 2018.

The Canadian retail scene has undergone similar trends but hasn't been an exact copy of the United States. The retailer's Liverpool store was abruptly closed on Saturday.

That appears no longer to be a winning business model, as the tastes of young consumers have reportedly moved to become more environmentally conscious.

Forever 21 was founded in 1984 in Los Angeles and then grew rapidly banking on cheap apparels and fast fashion shopping, updating its styles regularly.

Fast fashion giant and recent meme material provider Fashion 21 is finally coming to grips with the times -- it's not 21 anymore and reality is a bitter pill to swallow.

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