NEW YORK: Teenage clothing emporium Forever 21, said on Sunday that it filed for Chapter 11 bankruptcy.
The chain said it will file a motion to close up to 178 of its more than 800 stores, though it said in a letter to customers that “the decisions as to which domestic stores will be closing are ongoing, pending the outcome of continued conversations with landlords.”
“We do however expect a significant number of these stores will remain open and operate as usual, and we do not expect to exit any major markets in the U.S.,” the company said.
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The ability to get out of leases and close stores at lower cost is a key advantage that the bankruptcy process affords to retailers.
Linda Chang, executive vice president for the company, said in a news release that filing for Chapter 11 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.”
Forever 21 is the latest retailer to run into trouble amid the ascendancy of online shopping that has cut foot traffic to malls and brick-and-mortar stores. High debt levels and rent costs have also burdened traditional retailers. – Agencies
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