Global fast-fashion retailer Forever 21 Inc on Sunday said it was filing for voluntary bankruptcy, the latest US brick-and-mortar chain to embark on restructuring as shoppers migrate online.
The move will see the retailer close up to 350 of its stores worldwide, including up to 178 in its main US market, the Wall Street Journal reported, citing a spokeswoman as saying.
The Chapter 11 filing for bankruptcy protection is a “deliberate and decisive step to put us on a successful track for the future,” the firm said in a statement.
Photo: AFP
Commonly known as a “reorganization” bankruptcy, the Chapter 11 filing ensures Forever 21 will retain control and possession of its assets while restructuring is carried out.
Founded in Los Angeles in 1984 by South Korean husband and wife Chang Do-won and Chang Jin-sook, Forever 21 became a ubiquitous presence in shopping malls across the US, offering teen customers imitations of high-fashion brands at rock bottom prices.
Competing with brands like Sweden-based Hennes & Mauritz AB and Spain’s Zara, the chain launched an aggressive expansion into menswear and footwear after the 2008 financial crash, increasing its number of stores worldwide to 800.
However, analysts say it failed to react to the rise of online retailers, as well as shifting consumer sentiment against the environmental impact of fast fashion and concerns over working conditions in the factories where its US$10 tops and US$15 dresses are made.
Forever 21 pulled out of the Taiwan market in March. The following month is said it was exiting China and on Wednesday last week it closed its last store in Hong Kong as well as announcing that it would close all of its 14 outlets in Japan by the end of this month.
US pop star Ariana Grande last month sued the retailer for using her trademark style to promote its products without her permission, including advertisements featuring a “look-alike model.”
Additional reporting by staff writer
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