The Los Angeles, California-based, low-price fashion chain said it was closing 178 stores in the United States and all 44 stores in Canada while restructuring its global business under bankruptcy protection, according to the Associated Press.
To facilitate its restructuring, Forever 21 announced in a press release it has obtained $275 million in financing from its existing lenders with JPMorgan Chase Bank, N.A. as an agent, as well as $75 million in new capital from TPG Sixth Street Partners, and certain of its affiliated funds.
Founded in 1984, Forever 21, Inc. once had more than 800 stores in 57 countries. Besides the closings in the U.S. and Canada, the company plans to close most of its locations in Asia and Europe but will continue operating in Mexico and Latin America.
“The decisions as to which domestic stores will be closing are ongoing, pending the outcome of continued conversations with landlords,” it said in the statement. “We do, however, expect a significant number of these stores will remain open and operate as usual, and we do not expect to exit any major markets in the U.S.”
Brick-and-mortar vs online retailers
Forever 21 has joined a growing list of retailers, like Barneys New York and Diesel USA, seeking bankruptcy protection as they battle online competitors like Amazon, Walmart, and Target. Other retailers, like Payless ShoeSource and Charlotte Russe have shut down completely, according to CTV News Canada.
CBS News is reporting that according to the global research firm Coresight Research, so far, in 2019, publicly traded U.S. retailers have announced they will close 8,558 stores and open 3,446. That compares with 5,844 closures and 3,258 openings in all of 2018. Coresight estimates the number of store closures in 2019 could reach 12,000.
