New York- Forever 21, a one-time hot destination for teen shoppers, has filed for bankruptcy.
The fashion chain based in Los Angeles says it will close up to 178 stores. The company once had more than 800 stores in 57 countries.
In a statement to customers Sunday night, Forever 21 said the bankruptcy move was necessary so it could take “positive steps to reorganize the business so we can return to profitability.”
“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,” Linda Chang, the company’s executive vice president, said in a statement.
Forever 21 was inaugurated in 1984 and, along with other fast-fashion chains like H&M and Zara, rode a wave of popularity among teen customers that escalated in the mid-1990s.
They gained more and more popularity during the Great Recession when shoppers sought fashion bargains.
But over the last year or so, fast fashion has gone out of style. Young customers are losing interest in disposable clothes and are gravitating towards purchasing eco-friendly products. They’re also more interested in rental and online second-hand sites, where they see clothes worn again instead of ending up in a dumping ground.
Kirkland & Ellis LLP was serving as the company’s legal adviser, Alvarez & Marsal advised on restructuring, and Lazard acted as its investment banker.
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