(VOR News) – Based in the United States, the fast-fashion retailer Forever 21 has filed for bankruptcy under Chapter 11 of the US Code for the second time in the last six years.
The company faces a number of challenges at this time, including a drop in mall traffic, rising expenses, and increased competition from internet merchants.
The announcement was made by Forever 21 in a statement released on Sunday. According to the announcement, the business will start liquidation sales at all of its US locations and will carry on with a court-monitored process to sell off its assets.
Because its operations in other countries are managed by third-party licence holders, the company has not been impacted by the difficulty it has had finding a buyer for its 350 stores in the United States.
Its overseas activities are effectively overseen by the business.
The brand, which was previously a favourite among younger consumers because to its affordable and stylish clothing, has been under increasing market pressure since the emergence of e-commerce and competition from rival fast-fashion retailers like Zara and H&M. Consequently, the store has had to deal with an increasing level of competition.
The Forever 21 brand was founded in 1984 by South Korean immigrants in Los Angeles. The company once had more than 800 locations worldwide, with 500 of those locations being in the United States of America.
However, the company’s operations have been severely impacted by the closure of retail malls and a change in consumer behaviour. It was a major player in the fast-fashion industry at its height, thus the company’s operations have been struggling ever since.
According to documents filed with the District of Delaware court, the corporation’s assets are estimated to be between $100 million and $500 million, and its liabilities are estimated to be between $1 billion and $10 billion.
The corporation has been unable to swiftly adjust to the continuously evolving retail sector because it is carrying unmanageable debt. Forever 21 has stated that, should its assets be sold successfully, it intends to change the direction of the business.
This is a component of the business’s efforts to improve its situation. As a result, the brand might not be able to completely and consistently cease all of its operations.
The company will continue to run its website and maintain its stores open in the United States despite the difficulties it is now encountering.
This is true even though Forever 21’s future is undetermined.
The process of liquidation may have an effect on the remaining retail sites of the firm located all throughout the country. There is a possibility that this will occur.
“We have been unable to find a sustainable path forward, given competition from foreign fast-fashion companies, as well as rising costs and economic challenges impacting our core customers,” said Brad Sell, the chief financial officer of Forever 21 “We have been unable to find a path forward that is sustainable.”
Messages like this were made public by Forever 21. Despite their best efforts, Forever 21 has been unable to discover a way forward that is both viable and inventive.
A group of investors joined together to establish a joint venture in 2019 with the goal of saving Forever 21 from bankruptcy.
However, the acquisition has caused the company to experience financial troubles once more. An era for a once-dominant force in the fashion retail sector will come to an end with the liquidation sales that will occur at the brand’s sites in the United States. Since the sales will be held at the locations, this will be the case. The brand’s future is not totally clear at this time.
SOURCE: TB
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