Fast-fashion giant Forever 21 has filed for bankruptcy, reported The New York Times. It's an unsurprising move that industry watchers saw coming. The company will shutter hundreds of stores as part of its Chapter 11 filing, renegotiate rent on existing retail spaces, and will restructure the company in an attempt to maintain solvency. The move is also expected to affect Riley Rose, Forever 21's beauty retail venture, and its lower-priced brand F21 Red.
How did this happen? It's the same retail story as the late American Apparel — the company expanded too quickly to sustain itself, and shoppers aren't connecting with the brand.
In a statement, Forever 21 insists that it is "NOT going out of business."
"Today, Forever 21, Inc. voluntarily filed for bankruptcy protection under chapter 11 of the U.S. Bankruptcy Code," the company announced via a statement on its website. Addressing many customers' immediate concerns, Forever 21 insists that, at its remaining stores, "it will continue to feel like a normal day ... gift cards will continue to be accepted, and our policies, including returns and exchanges, remain the same."
Forever 21 also said that a "significant number" of stores will remain open, but that decisions about which "domestic stores will be closing are ongoing."