Forever 21 reportedly preparing to file for bankruptcy

[Sherloid Bai 1,137]

https://edition.cnn.com/2019/08/29/business/forever-21-bankruptcy-trnd/index.html

Spoiler

 

Teen clothing retailer Forever 21 is preparing for a potential bankruptcy filing, according to several published reports.

Forever 21, which is privately held, has more than 800 stores in 57 countries. And while many retailers have been paring back their network of stores in recent years, Forever 21 was adding stores as recently as 2016. It still has as many stores as it reported at that time.

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

The company did not respond to requests for comment.

Traditional brick-and-mortar retailers that specialize in selling clothes to teens and young adults have had a particularly hard time in recent years as younger buyers shift from mall visits to online purchases.

Among the retailers in the segment that filed for bankruptcy and closed all their stores during the last five years are Wet Seal, American Apparel and Delia's. Aeropostale also filed for bankruptcy in 2016 but has kept some of its stores open.

Many retailers have run into trouble due to being purchased by private equity firms or hedge funds. But Forever 21 is still owned by its founders, Do Won and Jin Sook Chang. A husband and wife team, the Changs immigrated from South Korea in 1981 and started the chain three years later with a single 900 square-foot store in Los Angeles and only $11,000 in savings.

Forbes lists the couple as having a net worth of $1.5 billion, and the privately-held company itself as having annual sales of $3.4 billion and 30,000 employees.

Iconic but troubled Lord & Taylor sold to clothing rental subscription company Le Tote

Bloomberg reported in June that some members of Forever 21 management had asked some of its landlords to take a stake in the company as a way of coming up with funds it needs.

Mall owner Simon Property Group (SPG), for which Forever 21 is a major tenant, took a stake in Aeropostale during its bankruptcy process. In July Simon Property CEO David Simon told investors it was open to working with other tenants facing trouble, without mentioning any by name.

"We'll work together on other distressed situations, and let's face it, there are some out there," Simon said. "But we're only going to buy into companies that, we think, have brands and that the volume that is worth doing it."

But Bloomberg reported Thursday that Do Won Chang has been trying to maintain control of the company in any restructuring, and that his desire to do so has limited the company's ability to find funds it needs.

 

 

[Aphrodizy26 6]

Girl i’m not surprised not one bit! One of the malls in houston recently had an entire bottom floor wing purchased by H&M. They bought out F21’s bottom floor. 
essentially they changed their mind and they just stuck clearance at the bottom. But my friend & i asked what was gonna happen with that whole section and the associates were dumbfounded, one said she was demoted due to the salary being cut. So it seemed like something was going on company wise because it also seemed understaffed (as if they probably couldn’t afford to give people hours even after cutting a whole salary)

[Guest]

New York (CNN Business)Teen clothing retailer Forever 21 is preparing for a potential bankruptcy filing, according to several published reports.

Forever 21, which is privately held, has more than 800 stores in 57 countries. And while many retailers have been paring back their network of stores in recent years, Forever 21 was adding stores as recently as 2016. It still has as many stores as it reported at that time.

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

The company did not respond to requests for comment.

Traditional brick-and-mortar retailers that specialize in selling clothes to teens and young adults have had a particularly hard time in recent years as younger buyers shift from mall visits to online purchases.

Among the retailers in the segment that filed for bankruptcy and closed all their stores during the last five years are Wet Seal, American Apparel and Delia's. Aeropostale also filed for bankruptcy in 2016 but has kept some of its stores open.

Many retailers have run into trouble due to being purchased by private equity firms or hedge funds. But Forever 21 is still owned by its founders, Do Won and Jin Sook Chang. A husband and wife team, the Changs immigrated from South Korea in 1981 and started the chain three years later with a single 900 square-foot store in Los Angeles and only $11,000 in savings.

Forbes lists the couple as having a net worth of $1.5 billion, and the privately-held company itself as having annual sales of $3.4 billion and 30,000 employees.

Iconic but troubled Lord & Taylor sold to clothing rental subscription company Le Tote

Bloomberg reported in June that some members of Forever 21 management had asked some of its landlords to take a stake in the company as a way of coming up with funds it needs.

Mall owner Simon Property Group (SPG), for which Forever 21 is a major tenant, took a stake in Aeropostale during its bankruptcy process. In July Simon Property CEO David Simon told investors it was open to working with other tenants facing trouble, without mentioning any by name.

"We'll work together on other distressed situations, and let's face it, there are some out there," Simon said. "But we're only going to buy into companies that, we think, have brands and that the volume that is worth doing it."

But Bloomberg reported Thursday that Do Won Chang has been trying to maintain control of the company in any restructuring, and that his desire to do so has limited the company's ability to find funds it needs.

[JazzGa 14,654]

I think this is highly expected news, F21 has been nosediving for years. First there were the memes about how their stores were constantly an exploded clearance rack wilderness with no sign of a feral employee, and that was 2 years ago.  F21 is all about cheap and fast, but you can't compete with the cheapness and immediate Kardashian copying ability of Wish.com, Missguided, etc. when you have a brick and mortar storefront.

[Sherloid Bai 1,137]

Omg I thought my local store was the only one that had a whole floor dedicated to clearance 

[AmericanxDream 2,049]

Hipsters lost. 

[JusKeepBreathin 19,311]

I keep wondering if both Aeropostale and F21 are in trouble and their  clothes is priced super moderately, where are Generation Z buying their clothes. 

[GypsyVida 5,960]

I'm not surprised. Their stores are like a jungle. Also their clothes are horrible quality and too expensive for the low quality that they are.

[GypsyVida 5,960]

1 minute ago, JusKeepBreathin said:

where are Generation Z buying their clothes. 

H&M and American Eagle

[JusKeepBreathin 19,311]

5 minutes ago, GypsyVida said:

H&M and American Eagle

I thought about H&M and I just checked but their profit is only up 10% from last year. Is that really enough to put F21 and Areopostal out of business.  I haven't checked AE yet.

[River 127,562]

they were expensive for no reason and the quality was average.

[brownie 5]

Their clothes fall apart in like 2 washes, I'm glad these cheap sweatshop-using places is closing. 

[Zander 14,944]

Although I've not thought too much about the implications I think this is a good thing (obviously not with people being out of jobs etc.. etc.). I think there needs to be a purge of Forever 21 and similar fast fashion retail stores because I just think there's too much and its unsustainable. Even charity shops are getting too many poor quality clothes and having to turn them away.

[Amidana 4,322]

Serves them right for taking away the plus section 

[sillynate 6,170]

18 minutes ago, brownie said:

Their clothes fall apart in like 2 washes 

90% of my wardrobe is from F21 & nothing has fallen apart