Forever 21 files for Chapter 11 bankruptcy protection, may close up to 178 US stores
Fashion retailer Forever 21 filed for Chapter 11 bankruptcy protection Sunday, hobbled by expensive leases and declining mall traffic.
Forever 21 requested court protection from its creditors in a bid to stay in business.
The family-owned company said it would close “most” of its stores in Asia and Europe and up to 178 stores in the U.S.
The retailer said the exact number of closures would be contingent on negotiations with landlords, but “we … 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 U.S.”
With more than 800 locations overall, Forever 21 is one of the largest specialty apparel retailers in the country. The company’s stores average 38,000 square feet, making it smaller than the average department store but larger than many of its apparel competitors.
The retailer’s aggressive expansion in recent years has led to problems. Much like other traditional retailers, the company is grappling with digital competition and changing shopping habits.
“This was an important and necessary step to secure the future of our Company, which will enable us to reorganize our business and reposition Forever 21,” Forever 21 executive vice president Linda Chang said in a statement.
In bankruptcy, Forever 21 said it would continue to honor gift cards, returns and exchanges. Bankruptcy experts typically urge consumers to spend gift cards if there’s any concern that a retailer will liquidate.
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Forever 21 eyes closures: Forever 21 reportedly set to close ‘at least’ 100 stores in bankruptcy
Across the retail sector, more than 8,200 stores have already announced plans to shut down this year, according to Coresight Research. That’s up from nearly 5,900 in 2018.
Mall retailers that have announced plans to liquidate in 2019 have included Payless ShoeSource, Gymboree, Charlotte Russe and Charming Charlie.
Forever 21 is owned by the family of Do Won and Jin Sook.
Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.
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