Forever 21 files for Chapter 11 bankruptcy and asks for rent reductions due to financial struggles

From CNBC: 2024-06-21 08:38:14

Fashion retailer Forever 21 has filed for Chapter 11 bankruptcy protection in the US, asking landlords to cut rent by up to 50% as sales decline. Facing financial difficulties, the company is working to restructure leases, with no plans for a second bankruptcy filing. Issues include a saturated market and inventory struggles.

After being bought out in bankruptcy in 2019, Forever 21’s financial struggles continue, impacting operator Sparc Group and vendors. Late payments to vendors signal larger financial issues, with competitors like Shein and Temu outpacing the traditional retailer. The industry average for late payments is between 12-13 days past due.

Authentic Brands CEO admits acquiring Forever 21 was a mistake, failing to recognize the threat from ultra-fast fashion retailers like Shein. The partnership between the two includes co-branded products and positive foot traffic for Forever 21. Observers wonder if Shein could take over Forever 21’s stores, despite lacking experience in physical retail.



Read more at CNBC: Forever 21 seeks rent concessions, facing financial struggles