Forever 21 announces bankruptcy for it's stores in the US

According to CNN Business, Forever 21, a store which has been a staple in many outlet malls, announced yesterday that the teenage clothing store would file for Chapter 11 bankruptcy. The clothing chain said they wanted to "overhaul its global business", shutting down about 300-350 different stores, with 178 different stores at the most being shut down in the United States. It also wanted to close international locations around in Asia and Europe as well. The chain has 549 stores in the United States, and 251 in other countries, and the chain said they will continue to operate in Mexico and Latin America.

According to a letter sent to customers, they said that they'll try to continue to operate in major markets like New York and Los Angeles. Linda Chang, the executive vice president of Forever 21, said that it was an important and necessary step to secure the future for the company.

Forever 21 had obtained $275 million financing from JPMorgan Chase [JPM], along with new $75 million capital from TPG Sixth Street Partners that will allow to operate the business in a "as usual manner." The canadian operations were also protected by creditors as well.

Forever 21 isn't the only retailer to get run over, many other retailers have also shut down their stores, or filed for bankruptcy, thanks to the rise of online shopping from websites like Amazon. This has cut down many traffic to many outlet malls and other brick-and-mortar stores.

Even successful stores like Toys R Us in past years had also filed for bankruptcy as well.

This year, there has been over 8,200 store closings, which is way more than 2018's total of 5,589 according to a report from Coresight Research. Payless and Gymboree also filed for bankruptcy for a second time again, resulting in almost 3,000 stores shutting down of the two chains.

Coresight also predicts that by the end of 2019 that 12,000 retail stores may shut down as well.

Forever 21 was launched back in 1984 in a small store in Los Angeles by South Korean Do Wan Chang and his wife, Jin Sook. It would expand very quickly in suburban malls, which would cater to young girls and women, with a mix of some inexpensive items. It created the "fast-fashion model", drawing in customers every day thanks to it's updated mix of clothes which were never offered at department stores like Ross and Wal-Mart.

According to a store manager back in 2001, he said that they get new merchandise every day, and that most mall stores tend to get them between 1-2 days, saying that they always have the hottest and newest styles.

Forever 21 also has a massive store in Times Square, a 90,000 square feet, and four story building, with 151 fitting rooms. This is Forever 21's flagship store. And even though many retailers tried to scale back on operations, Forever 21 still continued to add even more stores as of 2016.

Traditional brick-and-mortar stores like Forever 21 have struggled recently, as many younger people have chosen to buy their clothes through online stores such as Amazon.

Wet Seal, American Apparel, and even Delia's have all filed for bankruptcy, and had closed their stores since the past 5 years, while Aeropostale also filed for bankruptcy back in 2016, but would continue to keep some stores open. Charlotte Russe also filed for bankruptcy this year as well, and on top of that, big-box retailers like Sears and KMart also filed for bankruptcy, shutting down all of their stores as well.

These retailers have gotten run over after they were purchased by equity firms or hedge funds, which would pile up debt. But Forever 21 still continues to be owned and operated by its founders.