American fashion retailer Forever 21 has filed for bankruptcy, adding that it planned to "exit most international locations in Asia and Europe".
According to News18.com, Forever 21 has filed for Chapter 11 bankruptcy protection. Chapter 11 protection postpones a US company's obligations to its creditors, giving it time to reorganise its debts or sell parts of the business. The privately held company based in Los Angeles says it will close up to 178 stores. The company once had more than 800 stores in 57 countries. Forever 21 joins Barneys New York and Diesel USA in a growing list of retailers seeking bankruptcy protection as they battle online competitors. Others like Payless ShoeSource and Charlotte Russe have shut down completely.
The California-based company made the announcement on Sunday night, the BBC reported. Founded in 1984, Forever 21 sells cheap, trendy clothing and accessories. The fast-fashion retailer competes with other major high-street brands such as Zara and H&M. The company said that it has obtained $275 million in financing from existing lenders and $75 million in new capital to assist with a global restructuring.
"This was an important and necessary step to secure the future of our company, which will enable us to reorganize our business and reposition Forever 21," the firm's Executive Vice President Linda Chang said in a statement.
The numbers bear out the crisis facing traditional retailers. So far this year, publicly traded U.S. retailers have announced they will close 8,558 stores and open 3,446, according to the global research firm Coresight Research. That compares with 5,844 closures and 3,258 openings in all of 2018. Coresight estimates the store closures could number 12,000 by the end of 2019.