The company then went on to assure customers they expect a significant number of stores to remain open and operate as usual.
Forever 21, the fast-fashion chain that filed for bankruptcy, offers a model for how big retailers may need to rethink business for the digital age - and Linda Chang, executive vice president, has pledged to put her family's brand back on track. However, Toys R Us Canada continues to operate as a separate business despite the closure of its American and British counterparts.
THE local operations of fashion retailer Forever 21 will not be affected by the parent company's bankruptcy filing in the United States, according to a top official of SM Retail, Inc. The store always faced competition from such fast-fashion rivals as H&M and Zara, but the rise of e-commerce brought a wave of new competitors and imitators also geared toward the hip and cheap.
"If the landlords can keep these stores operating even at reduced rents, it gives them more control in how to re-purpose the spaces", said one source.
The Los Angeles-based company revealed it had filed for voluntary Chapter 11 bankruptcy protection in a statement on Sunday.
The company has roughly 800 stores globally and plans to close between 300-350 stores, a spokesperson told Euronews.
In addition to the USA closures, Forever 21 plans to shutter most of its locations in Asia and Europe but will continue operating in Mexico and Latin America. Up to 178 stores will be closed in the US.
The company stated that after the closedown of stores and its focus on online operations is expected to bring $2.5 billion in annual sales.
"We are confident this is the right path for the long-term health of our business". The retailer doesn't have a lot of leverage over its landlords, according to Bloomberg Intelligence, which said in a September 27 report that Forever 21 accounts for just 1.4% of Simon's annual rent.
The retailer was known for providing tops, trousers and other apparel - typically for $20 or less each - to teenage buyers who were constantly searching for the latest trends, often because they were influenced by their favorite celebrities on social media. So far this year, publicly traded USA retailers have announced they will close 8,558 stores and open 3,446, according to the global research firm Coresight Research.
The company also specializes in fast fashion, which has been the source of widespread backlash recently over concerns about sustainability and the environmental impact of such lower-quality, mass produced merchandise.
The Chapter 11 filings, submitted in DE on Sunday, shows the company has between $1 billion to $10 billion in liabilities and owes more than $10 million to several clothing distributors.
"However, over the past five years the number of customers has waned as the brand has fallen increasingly out of favour".