Forever 21 files for bankruptcy, to shut down 178 stores across US

Fashion retailer Forever 21 Inc has become the latest to join the long list of US retailers that have failed to compete with the e-commerce companies and have eventually shut down. The company filed for bankruptcy on Sunday and has sought approval to shut down 178 stores across the United States. Since the start of 2017, more than 20 US retailers, including Sears Holdings Corp and Toys `R` Us, have filed for bankruptcy as more customers shop online and eschew large malls. The development comes a week after Forever 21 had said it would exit Japan and close all 14 stores at the end of October.

"We have requested approval to close up to 178 stores across the U.S. The decisions as to which domestic stores will be closing are ongoing, pending the outcome of continued conversations with landlords," the company said in an email statement. Founded in 1984, the retailer said it has 815 stores in 57 countries.

The company also said its Canadian subsidiary filed for bankruptcy and it plans to wind down the business, closing 44 stores in the country. However, it will continue to work in Mexico and Latin America. The company lists both assets and liabilities in the range of $1 billion to $10 billion, according to the court filing in the US Bankruptcy Court for the District of Delaware.

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In the off line market, Forever 21 competes with other major high-street brands such as Zara and H&M. It said that it has obtained $275 million in financing from existing lenders and $75 million in new capital to assist with a global restructuring. "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," the firm`s Executive Vice President Linda Chang said in a statement.

Forever 21 has also been more vulnerable than some other chains because of its large footprints in major malls, which are attracting fewer shoppers.