Forever 21, one of the biggest fashion retailers in the world, filed for Chapter 11 bankruptcy protection in the United States (US).
Chapter 11 protection essentially allows an American company to take the time to reorganise its debts or sell a part of its business before fulfilling its obligations to its creditors.
A spokesperson for the company announced it will shut down close to 350 stores across the globe. While it plans to operate in Latin American it will "exit most international locations in Asia and Europe."
It seems many netizens had something to say about the shocking news and reactions were mixed.One Twitter user was shaken by the announcement:
Meanwhile, others are looking forward to a sale.
Comedians also came up with puns due to the chain’s name.
Forever 21 primarily sells affordable clothes and accessories. Brands like Zara and H&M are some of its biggest competitors. Some analysts believe the company could be struggling with competition from online competitors."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," Neil Saunders, managing director of GlobalData Retail, told a news portal.
He further explained: "Over the past few years, the brand has lost much of the excitement and oomph which is critical to driving footfall and sales and is now something of an also-ran which is too easily overlooked.
However, in a public letter, the retailers wanted to let customers know that stores will still be open. "Decisions as to which international locations will be closing are ongoing. We do not expect to exit any major markets in the US," the spokesperson said. Adding, "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."
Forever 21 has reportedly received $275 million in financing from the company's lenders, as well as $75 million in new capital from TPG Sixth Street Partners. For now, the company believes this is the right move to make. "Once we complete a reorganization, Forever 21 will be a stronger, more viable company that is better positioned to prosper for years to come," the company stated in the letter.
Picture Courtesy: Google Images