Forever 21 fell victim to a combination of slower mall traffic, dissatisfaction with its clothes, its own over-expansion and the ongoing consumer shift to online shopping.
Under Chapter 11, Forever 21’s debts are frozen while it continues operating and works out a reorganization plan. Its plan calls for closing about 350 stores — including 178, or one-third, of its 549 U.S. locations. Forever 21 hasn’t yet revealed which stores will be shuttered.The firm’s 44 Canadian stores, and most of its locations in Asia and Europe, also will be closed.in restructuring financing to help it reorganize and prepare for the crucial holiday shopping season.
Forever 21 said its reorganization would leave the chain “better positioned to prosper for years to come.” But some analysts said that while Chapter 11 would help the company right itself financially, Forever 21 still faces the challenge of rebuilding its brand so that it can grow again one day. The retailer was known for providing tops, pants and other apparel – typically for $20 or less each – to teenage buyers who were constantly searching for the latest trends, often because they were influenced by their favorite celebrities on social media. Two other big chains, H&M and Zara, also compete with Forever 21 in the fast-fashion sector.
In addition, “fashion is about image; image is important to people,” Beahm said of Forever 21’s reputation. “If there’s a tarnished image about that brand, few customers are going to develop a strong loyalty toward it.”
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