Apparel Retailer Forever 21 said it started voluntary bankruptcy proceedings in the United States on Monday, while launching a “systematically air down” of American shops, pursuing parallel to a possible sales.
According to a press release by the brand operator F21 OPCO LLC in the United States, fast-fashioned giants, in concerts with their lenders, plan to sell liquidation at American stores, “Using a court simultaneously for some or all assets,” Some or all assets or all assets, sales and marketing process for all assets.
This step marks the reorganization of second chapter 11 bankruptcy by Forever 21 in six years, after the 2019 filing that shrinks the chain’s store fleet to a great extent.
According to its website, the series currently have 540 stores.
The company’s American stores “will be open throughout the process and continue to serve customers”, while locations outside the United States, which are operated by other licenses, are not part of the bankruptcy scheme, the company said.
In 1984, South Korean husband-wife Do Won and Jin Suk Chang established in Los Angeles, Forever 21 became a ubiquitous appearance in the shopping mall across the United States, offering to mimic high-fashioned brands at rock bottom prices.
But Globaldata Managing Director Neil Saunders said the company was buffed with strict competition from cheap Chinese markets with “double headwind” from a weak dress market in recent years.
Saunders said in a note, “Forever 21 has not helped itself through these challenges: there is a lack of merchandising and classification, and the brand lacks any clear outlook for a long time.”
“The net result is that more and more customers, especially at the young end of the market, have left it.”
Saunders pointed out the possibility that the brand could tolerate online through a licensing sales, which would probably enter a price that “it would now need to reflect its low position,” he said.
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