All of us have probably bought something from Forever 21, one of the biggest affordable fashion retailers that captured the hearts of fashionistas, young and old, around the globe. Today, reports are in that the company has finally filed for Chapter 11 bankruptcy protection after months of struggling as a brand.
If you’re a fan of the brand, you probably saw it coming. Forever 21 is known to take up huge spaces in malls, and in the last few months, the retailer has been noticeably down-sizing their stores even in the Philippines.
But before you start panicking, filing for Chapter 11 bankruptcy doesn’t exactly mean that the brand is completely going out of business. It is just something the retailer has decided to do in order to stay in the fashion game.
Chapter 11 bankruptcy, also known as a “reorganization” bankruptcy, is something a company that is in financial distress can file for in order to keep its business going as it clears its debt with creditors.
The brand released a public letter to reassure its supporters that they are not going anywhere as a business.
“This does not mean that we are going out of business – on the contrary, filing for bankruptcy protection is a deliberate and decisive step to put us on a successful track for the future.“
As part of its countermeasures, the fast-fashion brand will be shutting down up to 178 stores in the U.S., as well as most of its branches in Europe and Asia. However, the brand plans on continuing operations in Latin America and Mexico.
Forever 21 is not the only brick and mortar business that has filed for bankruptcy in the last couple of years. As consumers continue to do most of their shopping online, traditional retailers are doomed to slowly cease as we know them. But the shift to online shopping isn’t the only reason why companies like Forever 21 are losing customers.
Anyone who has ever bought from Forever 21 knows that its products don’t usually stand the test of time. This means that the brand’s products are more likely to end up in landfills a lot quicker. Due to this, more and more consumers are looking for more eco-friendly clothing and accessories.
In addition, fast fashion brands also stand rival to rental clothing sites and online secondhand clothing stores such as thredUP, which is a large online thrift store company that seeks to minimize the carbon footprint that fashion merchandise leaves behind.
Fashion has always been a tough industry to be in and Forever 21 failed to keep up. However, not all hope is lost for the brand. Filing for bankruptcy might be the best step the brand has taken since setting up more stores globally.
Executive Vice President, Linda Chang defines that move as a vital step in keeping the company afloat. She said that it is an “important and necessary step to secure the future of our company, which will enable us to reorganize our business and reposition Forever 21.”
What do you think of Forever 21’s decision? Share your comments below.