Forever 21 Brand is Close to Bankruptcy

American fashion retailer Forever 21 is preparing to file for bankruptcy.

The company expects that this will help close the stores in inefficient locations, as well as to restructure the business. According to expert estimates, last year, the brand's sales decreased by 20-25%. 

Last week shareholders engaged consultants to restructure their debt obligations and revise their portfolio, which includes 815 stores located in the U.S. and Canada, Europe, and Asia. Earlier, Forever 21 held a series of negotiations to provide additional financing, but no suitable options were found. Experts agree that bankruptcy is the most likely scenario for the retailer's business. The brand was founded in 1984 by South Korean nationals Jin Suk and Doe Won Chang. As a result of the crisis in the U.S. retail market in 2019, the pair lost almost half of its fortune, which fell to $1.6 billion. 

Analysts note that Forever 21 is one of the leading tenants of shopping and entertainment centers across the country. In the event of bankruptcy and mass closure of stores, American malls, which experienced problems with filling and attracting traffic, maybe hit even harder. In 2019 alone, U.S. retailers announced the closing of a total of more than 8,000 stores. 

In early 2019, the Payless shoe chain announced the bankruptcy and closure of all 2,500 retail stores. The fast-fashion brands like Wet Seal, American Apparel and Delia's, as well as the Aeropostale, which has retained some of its stores, are among the brands that went bankrupt in the last five years. As for Forever 21, in recent years, it has been one of the fastest-growing brands in the youth fashion market. As early as 2016, the network was actively developing despite the problems of the main competitors in the market. But the brand began to reduce its space in the U.S. market and to close international stores unnoticed.

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