Forever 21 files for bankruptcy: shuts down 200 stores worldwide

Image via @ Forever 21 | Facebook
  • Forever 21 has been losing for many years that it has filed for bankruptcy last month
  • The teenage emporium planned to shut down 200 stores worldwide as part of its restructuring strategy
  • Meanwhile, the Philippine chain stores will operate business as usual, as confirmed by SM Retail Inc. President, Chito Manalo Jr.

Perhaps, nothing lasts forever.  But the good news is even your troubles won’t.

Image via @ Forever 21 | Facebook

This is how the popular  American fast fashion retailer Forever 21 sees its future after it filed for bankruptcy last month.  The teenage chain store’s profits weren’t able to compensate for the expensive store leases, the rise of online shopping competitors like Asos and Fashion Nova, and its becoming an unprofitable target market that focuses on teenage and 20-something shoppers.  This move will help Forever 21 preserve some of its remaining capital and negotiate with the landlords on their outstanding leases, which they have not paid since last month.

How have consumers changed so far?

Younger buyers tended to prefer clothes that are more in the end sustainable in value rather than “disposable” items.  The retail company used to perceive that the market’s desire for fast fashion is going to continue for more years or so, like how its competitor Zara has succeeded.  However,  according to Mark A. Cohen, the director of retail studies at Columbia Business School,  the company has expanded far too quickly without anticipating how the future market will behave.

Ms. Chang, the company’s founder, admitted that there were challenges in declining mall traffic and decreasing interest in fast fashion.

“You hear a lot of conversations about the rental market or the resale market and things like that, so I think there are definitely shifts there that are happening.  It’s still a massive market, but we do want to make sure we get ahead of things and that we’re not just staying still while the consumers are changing.”

Image via @ Forever 21 | Facebook

With this, the company will shut down 200 stores in which a third includes its main footprints in the US as part of its reorganization strategy.  They will also cut back on home decor, electronics, and cosmetics.

But the Filipino patrons need not worry.  SM Retail Inc. President Chito Manalo Jr. announced on September 30 that  Forever 21 would continue its full operations in 15 stores nationwide.

We hope that’s a relief for shoppers in the country.

Sources:  The New York Times   CNN Philippines