Forever 21 files for bankruptcy, may close up to 178 US stores

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Forever 21 may close 178 US stores during bankruptcy proceedings. Started by a Korean immigrant couple in 1984, the retailer went all-in on fast fashion, malls and big, expensive physical stores.

The chain said it is planning to overhaul its global business, closing between 300 and 350 stores, including as many as 178 in the United States. It also plans to exit “most of its international locations in Asia and Europe.” The company, which currently has 549 US stores and 251 in other countries, will continue to operate in Mexico and Latin America.

In a letter to customers on Sunday night, the company said that decisions about which US stores would close 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 said.

The ability to get out of leases and close stores at lower cost is a key advantage that the bankruptcy process affords to retailers.

The retailer is just the latest to run into trouble amid the rise of online shopping that has cut foot traffic to malls and brick-and-mortar stores. High debt levels and rent costs have also burdened traditional retailers.

In recent years, even healthy retailers have closed stores and struggling ones have filed for bankruptcy.

The chain built massive stores, like its four-story, 90,000 square-foot flagships with 151 fitting rooms in the heart of New York’s Times Square. And while many retailers started paring back their network of stores in recent years, Forever 21 kept adding stores as recently as 2016.

 

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