Forever 21 Filed for Chapter 11 Bankruptcy, is This The End of the Fast-Fashion Company?
Is there such a thing as forever? After all, even fast-fashion giant Forever 21 doesn’t seem to embody its name after it filed for bankruptcy. However, this wasn’t all that shocking if you consider the lingering speculations about it in the past weeks leading to the big announcement, despite the brand downplaying the rumors.
The mall staple shared the news on its website but assured fans that many stores will still operate.
Chapter 11 Bankruptcy
Specifically, Forever 21 said it filed for Chapter 11 Bankruptcy, which gives a company a chance to restructure without the creditors breathing down their neck. In the process, it would be closing 350 branches all over the world, 178 of which are from the United States. Meanwhile, it would continue to offer clothes on its website, a spokesperson said.
Some of the shops that will close will be in Canada and Japan – the pullout in the Asian country happened just a week before the announcement, with a Forever 21 spokesperson revealing sales had not really been ideal.
The retailer’s vice president Linda Chang deemed the move as necessary for the health of the company. Its founder, Do Won Chang, also echoed the same sentiment, explaining the step made is meant to strengthen Forever 21, whose competitions include H&M and Zara that also sell relatively more affordable clothes than high-end labels.
The filing for bankruptcy reflects the struggle the brand is facing in terms of online rivalry, a decline in sales, and the evolution of the consumers’ preferences. It also speaks a lot about how the owners, the Chang family, are seemingly in a problematic state in dealing with the financial problems they are facing.
It’s a stark contrast to when the brand first launched in 1984, a store that ultimately branched out to other states.
Now, it is treading the same path as that of Sears and Payless, which also opted for bankruptcy amid low sales. Since its inception, Forever 21 has aggressively expanded, but while that was happening, online shopping boomed as well.
Essentially, now that you can practically buy anything with a touch of your fingertips, you don’t have to drive to the mall to get yourself a top – this became a problem for the company.
Could this mean the death of Forever 21? Perhaps not because as the execs would put it, they are just reorganizing. This could mean they are shifting their focus on other places and are learning to strengthen their online presence to compete with others like Fashion Nova and ASOS which have been doing the same for quite some time.
In the past months before the bankruptcy announcement, Forever 21 was lambasted for different reasons. One of the most recent was Ariana Grande, who accused the brand of using her name and copying her style by dressing a model (that uncannily looks like her) similarly with what she donned in the music video 7 Rings.
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