Forever 21 is currently trending as it has been announced that they are preparing to file for bankruptcy!
Founded in 1984, Forever 21 operates more than 800 stores in the U.S., Europe, Asia, and Latin America. And, according to Bloomberg, Forever 21 is preparing to file for bankruptcy. It has been reported that the fashion retailer has been attempting to secure additional financing, but negotiations with lenders have stalled.
Forever 21 struggled to gain the attention of a wider group of consumers. They were first known for targeting two generations of customers, but most recently, it turned into three. Most recently, several Forever 21 stores have begun receiving bad reviews on Yelp due to customer complaints on there not being enough employees on the floor available to help. Additionally, customers often find entire sections of dressing rooms closed off and cash registers shut down. Some stores have clothes sitting on the floor or remain on the wrong rack, as well as have become simply messy in plain sight.
In 2018 alone, Forever 21’s sales dropped an estimated 20% or 25%. During the last decade, Forever 21 was signing leases for big spaces that had become vacant from struggling department stores. Their store count ranged from 480 stores in 2010 to 600 stores in 2014, and 800 stores in 2018. And according to an analysis by retail consultancy Customer Growth Partners, Forever 21 can be spending as much as 30% of their revenue on rent.
All in all, a bankruptcy filing would help the company close down unprofitable stores and recapitalize the business. But, it could bring a long term effect for the country’s major mall owners due to the difficulty of filling the vacant retail spaces.