Fashion retailer Forever 21 has filed for bankruptcy, joining a growing list of brick-and-mortar players who have succumbed to the onslaught of e-commerce.
Since the start of 2017, more than 20 US retailers, including Kmart parent company Sears Holdings Corp and Toys ‘R’ Us, have filed for bankruptcy as more customers shift to online retailers such as Amazon.
Forever 21 said the restructuring will allow it to focus on the profitable core part of its operations and shut some international locations.
“We have requested approval to close up to 178 stores across the US,” the company said in an email statement.
“The decisions as to which domestic stores will be closing are ongoing, pending the outcome of continued conversations with landlords.
The company lists both assets and liabilities in the range of $US1 billion to $US10 billion ($1.4 billion $14.8 billion, according to the court filing in the US Bankruptcy Court for the District of Delaware.
The retailer said it received $US275 million ($400 million) in financing from its existing lenders with JPMorgan Chase Bank, N.A. acting as agent, and $114 million in new capital from TPG Sixth Street Partners and certain of its affiliated funds.
With these funds, Forever 21 said it intends to operate business as usual and will focus on profitable core parts of its operations.
Store closures outside the US
Founded in 1984, the retailer has 815 stores in 57 countries.
Meanwhile, the company plans to close most of its international locations in Asia and Europe but will continue operations in Mexico and Latin America.
Last week, it said it would exit Japan and close all 14 stores at the end of October.
The company also said its Canadian subsidiary filed for bankruptcy and it plans to wind down the business, closing 44 stores in the country.
Forever 21 opened the first Australian store in 2014 in Brisbane’s CBD.
The company has since shut its three flagship stores in Australia.
“We are confident this is the right path for the long-term health of our business,” Forever 21 said.
“Once we complete a reorganisation, Forever 21 will be a stronger, more viable company that is better positioned to prosper for years to come.”
ABC News/Reuters
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