Popular fashion brand Forever 21 has filed for bankruptcy, adding that it is looking to “exit most international locations in Asia and Europe”, according to the media reports on Monday. The American retailer made this announcement on Sunday night, the BBC reported.
Why Forever 21 planning bankruptcy?
Forever 21 has revealed that it will close up to 178 stores. The company once had over 800 stores in 57 countries. Talking about the reason behind this exit, the company said it is planning to focus on maximizing the value of its US stores and shut certain international locations.
“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.
Increasing online competition
The fashion brand is struggling against rising competition from online rivals. Zara and H&M are among the top competitors of Forever 21.
Neil Saunders, managing director of GlobalData Retail, said: “The entry of Forever 21 into Chapter 11 bankruptcy is a consequence of both changing trends and tastes within the apparel market and of missteps by the company.”
Other brands facing problems
You will be surprised to know that Forever 21 has joined brands like Barneys New York and Diesel USA in the growing list of retailers seeking bankruptcy protection because of online competitors. Other names like Payless ShoeSource and Charlotte Russe have shut down completely.