The California chain, which has spread the trend of "fast fashion" and was once one of the fastest-growing retailers in the U.S., announced bankruptcy.
The company will continue to operate in hundreds of locations throughout the U.S., Mexico, and Latin America and will continue to support the online store. However, it will cease operations in 40 countries in Europe and Asia, closing up to 350 stores worldwide. Almost two hundred stores will be closed in the U.S. According to representatives of Forever 21; this step will allow continuing the business while taking all the steps needed to restructure.
"This was an important and necessary step to ensure the future of our company, which will allow us to reorganize our business and transform Forever 21," said Linda Chang, executive vice president of the company.
The reason for this situation is the rapid growth of the company, which over the past six years has opened stores in 47 countries around the world, bringing the total number of stores to 8 hundred. This has significantly complicated management and negatively affected profitability. Especially against the background of the development of e-commerce, which is Forever 21 was not given due attention.
Some time ago, a team of consultants was hired to restructure the brand, which found itself in a difficult situation. However, due to internal disagreements, this did not do much good. Even though the company's income was up to 3 billion dollars annually, it always faced such problems as loss-making stores and unsold stocks.
The Forever 21 brand was founded in 1984 and became famous in the 90s for its inexpensive but stylish offerings, which were particularly popular among young women. In recent years, the company has experienced increased competition from new brands, which were actively developing in the network, selecting visitors from shopping centers.