The famous fashion retailer, Forever 21, reportedly may be preparing for a potential bankruptcy filing, according to sources close to the company.
According to Bloomberg, the famous retailer. (which operates around 800 stores worldwide with more than $3 billion in estimated annual sales) hired a team of advisers to help restructure its debt and has been in talks for additional financing, but negotiations with possible lenders have been stalled.
Forever 21 is one of the retail industry’s biggest remaining real estate tenants in the shopping mall industry, according to Bloomberg. It has more than 815 stores in 57 countries under the Forever 21, XXI Forever, For Love 21, Heritage 1981 reference banners. Forever 21 is still owned by its founders, Do Won and Jin Sook Chang. Husband and wife, the Changs immigrated from South Korea in 1981 and started the chain three years later with a single 900 square-foot store in Los Angeles and only $11,000 in savings. Forbes listed that the privately-held company itself has annual sales of $3.4 billion and 30,000 employees.
This potential bankruptcy is just one example of many financial crises other retailers in the industry have faced within the past year. Charlotte Russe, Victoria Secret, Payless, and Gap Inc. had plans to close all of its stores. Data reported by the National Retail Federation found that more companies have opened stores than closed them for each segment of the retail industry.
Forever 21’s financial struggle is also reflected in its public reputation most recently. Customers on Twitter criticized the retailer for mailing diet bars with plus-size online clothing orders, which Forever 21 issued an apology after. In 2018, the retailer was then criticized for featuring a Black Panther sweater on a white model, after which they promptly issued an apology and removed the photo from its site.
Filing for Chapter 11 bankruptcy protection often results in some store closures as retailers look to restructure the brand. The goal is typically to create a reorganized company to get a new start.
Forever 21 did not respond to Bloomberg’s request for any comment.