Forever21 to close up to 350 stores worldwide as it files for bankruptcy protection in the US
FASHION chain Forever 21 has filed for bankruptcy protection as it becomes the latest retailer to fall victim to the threat from online competitors.
The brand, which was once popular among teenagers and expanded rapidly across the world, could close 350 stores.
In the UK, Forever 21 has stores in Oxford Street in London, Liverpool and Birmingham.
It is yet to confirm whether these shops will be scrapped as part of the restructuring but says it expects to file for administration in the UK shortly, adding that it plans to shut some international locations.
Up to 178 of its 500 US stores could be closed in order to concentrate on profitable locations, it said.
The Chapter 11 bankruptcy allows the Los Angeles-based company to keep operating while it works out a plan to pay its creditors and turn around the business.
It has bagged $275million (£223million) in financing from lenders, as well as $75million (£61million) in new capital to try and bolster the stores it decides to keep.
Founded in 1984 by husband and wife Do Won Chang and Jin Sook Chang from South Korea, the retailer now has 815 stores in 57 countries.
Along with brands such as H&M and Zara, it initially rode a wave of enthusiasm for fast fashion, particularly from younger consumers.
But as people have turned to more streetwear, online shops and eco-friendly brands, its popularity has waned.
It has also suffered because it has large stores in shopping centres - which have become increasingly unpopular as shoppers visit malls less often.
History of Forever 21
Forever 21 operates more than 800 stores across the world.
- Originally known as Fashion 21, the store was founded in Los Angeles in 1984 by husband and wife, Do Won Chang and Jin Sook Chang from South Korea.
- Its first store is still in operation.
- It originally only sold women's clothing, but later expanded into menswear, children's clothing and homewear.
- The store made $700,000 in sales its first year.
- At its peak in 2015, Forever 21 made $4.4billion in revenue.
"The decisions as to which domestic stores will be closing are ongoing, pending the outcome of continued conversations with landlords," Forever 21 said.
"We do, however, 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 US."
The company plans to close most of its stores in Asia and Europe, and plans to reduce its overall number of stores by almost half.
Forever 21 announced last week that it would exit Japan and close all 14 of its stores in the country by the end of next month.
Its Canadian arm has also filed for bankruptcy and it will wind down the business, closing 44 stores.
It will continue operations in Mexico and Latin America.
The stores are still expected to honour gift cards, returns and exchanges.
"Once we complete a reorganization, Forever 21 will be a stronger, more viable company that is better positioned to prosper for years to come," the company said.
So far this year, publicly traded US retailers have announced they will close 8,558 stores and open 3,446, according to global research firm Coresight Research.
That compares with 5,844 closures and 3,258 openings in all of 2018.
More on Money
Forever 21 is by no means the only retailer hit by changing shopping trends.
Toy retailer Toys R Us announced in March last year that it would close all of its US and UK stores after a rescue deal failed.
And Gap announced in March that it would close more than 200 stores worldwide amid plunging sales.
Meanwhile, millions of Brits admit they get more of a "buzz" from buying second hand goods than they do from new.
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