Forever21, an American cheap clothing chain, announced on September 29, 2019 that it had formally filed for bankruptcy protection with the court and planned to end most of its international business in Asia and Europe.
The retailer has secured $275 million in financing from its existing lender JPMorgan Chase and $7.5 million in new funding from TPGSixthStreetPartners, among other ancillary funds to help support its operations while filing for bankruptcy.
A Forever21 spokesperson said the retailer has applied to close as many as 178 U.S. stores. Forever21’s aggressive store expansion has put pressure on its financial position. The retailer currently has 815 stores worldwide.
The retailer is shopping center owner Simon Property Group’s seventh-largest tenant in terms of rent.
Forever21 said it plans to end most of its international business in Asia and Europe, but will continue to operate in Mexico and Latin America, and does not expect to withdraw from the main U.S. market .
Forever21, based in Los Angeles, California, was founded in 1984. The retailer promoted the “fast fashion” shopping era: often offering new and cheap clothing. Shoppers can find dresses for $25 and tops for $10 on its website.
However, in recent years, sustainable fashion has become increasingly popular among the younger generation, who are more concerned about the environmental impact of buying clothes. Consumers tend to use second-hand fashion websites such as TheRealReal to purchase. According to data from GlobalData retail analysis company, second-hand fashion in the United States is expected to reach US$64 billion by 2028, and fast fashion will reach US$44 billion.
