Forever 21 Inc. is preparing for a potential bankruptcy filing as the fashion retailer’s cash dwindles and turnaround options fade, according to people with knowledge of the plans.
The company has been in talks for additional financing and working with a team of advisers to help it restructure its debt, but negotiations with possible lenders have so far stalled, the people said. Focus has thus shifted toward securing a potential debtor-in-possession loan to take the company into Chapter 11, they said, even as some window remains to strike a last-minute deal that keeps it out of court.
Representatives for Forever 21 didn’t respond to a request for comment.
A bankruptcy filing would help the company shed unprofitable stores and recapitalize the business, said the people, who requested anonymity discussing private negotiations. Yet it could also be problematic for the country’s major mall owners, including Simon Property Group Inc. and Brookfield Property Partners LP. Forever 21 is one of the biggest mall tenants still standing after a wave of bankruptcies in the retail sector.
Empty Spaces
If the chain were to close a significant number of stores as part of the restructuring, its landlords could have trouble filling the vacancies. Indianapolis-based Simon counts Forever 21 as its sixth-largest tenant excluding department stores, with 99 outlets covering 1.5 million square feet, according to a filing as of March 31.
Co-founder Do Won Chang has been focused on maintaining a controlling stake in Forever 21, which has limited its fundraising options.
A faction of company officials, without the approval of Chang, had asked its biggest landlords to consider taking a stake in the retailer amid a disagreement within its leadership, Bloomberg previously reported.
Founded in 1984, Forever 21 operates more than 800 stores in the U.S., Europe, Asia and Latin America.
Confirmed: Forever 21 files for Chapter 11 bankruptcy protection
Fashion retailer Forever 21 has filed for Chapter 11 bankruptcy protection in the US.
The company said it plans to "exit most international locations in Asia and Europe" but would continue to operate in Mexico and Latin America.
It expects to close up to 350 stores worldwide, a spokesperson said, including as many as 178 US stores.
Forever 21 sells inexpensive, trendy clothes and accessories, and competes against brands such as Zara and H&M.
But some analysts say the retailer, founded in 1984, has lost its way over the past five years, and fallen out of favour with young US shoppers looking for relatively cheap clothing.
A Forever 21 spokesperson said the retailer expected to have between 450 and 500 stores globally after this process, down from its current total of about 800.
Forever 21 had announced last week that it would pull out of Japan by October due to "continued sluggish sales".
The California-based firm has now said it is seeking to close up to 178 stores across the US. It is also closing its stores in Canada, but has provided few details on other markets.
"Decisions as to which international locations will be closing are ongoing. We do not expect to exit any major markets in the US," the spokesperson said.
More at https://www.bbc.com/news/business-49874688
Does anyone know if the stores in Singapore will be affected?
Well the Kimchi founders started with almost nothing, now they shall end up with almost nothing -sounds about right.
Forever21 can be renamed as Forever Closed.