Forever 21, a clothing retailer for teens is preparing for a potential bankruptcy, according to reports. The clothing retail company has more than 800 stores in 57 countries. Forever 21 is among the traditional “brick and mortar” stores that have seen financial trouble as young shoppers make online purchases instead of visiting the mall.
Wet Seal, American Apparel, Aeropostale, and Delia’s are among the retails the filed for bankruptcy and/or closed stores in the past five years.
Forever 21, privately owned by its founders, report $3.4 billion in annual sales and 30,000 employees. In trying to maintain control of the company, Forever 21’s owners limit the ability to find funds its company may need to avoid bankruptcy.
“Preparing for potential bankruptcy” means that the fashion retailer has reportedly talked with lenders and advisers to restructure its debt. Although a strong store presence, internet consumers affect chain stores, and “potentially” Forever 21’s days may be numbered.
In the past several years, American companies that have sustained decades of substantial store business including Sears, Toys R Us, Payless, and Mattress Firm have filed for bankruptcy. Even thought these are household brand names, they struggled keeping up with online shopping.
A chapter 11 bankruptcy filing may offer an opportunity for Forever 21 to restructure debt while continuing to operate the business. If Forever 21 can continue profit, without rebranding or with only closing smaller, less profitable stores, they may not have to completely shut down.
Once praised for winning over millennials using a social media / Instagram marketing strategy, shopping via a physical store experience and getting foot traffic in stores is a challenge.
Perhaps the idea of providing forever relevant and fashionable clothing for the 20 year old shoppers will stand the test of time. A bankruptcy, however, may be possible to buy more time for the company.