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Us Retailer Forever 21 Bought Back From Bankruptcy
Retailer Forever 21 has been saved from bankruptcy by three buyers who want to expand internationally.
New owners, Authentic Brands, Simon Property and Brookfield Property, also want to keep open most of the chain’s 448 US stores.
Forever 21 filed for bankruptcy last September as losses mounted from its international locations.
As part of its revamp, it plans to launch new lines of jewellery, footwear and handbags.
The fashion retailer is also looking for a new chief executive to drive the company forward.
Its three owners want to work with new and existing partners to expand in Europe, the Middle East and South East Asia, along with China.
Forever 21 has around 600 stores globally across 57 countries.
When it announced last year it had filed for Chapter 11 bankruptcy protection in the US, Forever 21 said it planned to exit most locations in Asia and Europe, but would remain in Mexico and Latin America.
Some analysts said the retailer had lost its way and fallen out of favour with young US shoppers who preferred cheaper clothing.
Headquartered in Los Angeles, Forever 21, like many of its bricks-and-mortar rivals, has struggled with rising competition from online retailers.
Authentic Brands is a brand management company, Simon Property operates malls and Brookfield Property runs commercial properties.
This Story Is Part Of A Group Of Stories Called
Four months after Forever 21 filed for bankruptcy in September, the company will likely be sold for $81 million to licensing company Authentic Brands Group and retail property landlords Simon and Brookfield, according to a bankruptcy court filing.
Forever 21 is requesting court approval to name the three companies as the lead stalking horse bidders of a court-supervised bankruptcy auction. This means Authentic Brands, Simon, and Brookfield have set the lowest initial bid $81 million on the retailer, although rival bidders can make a higher counteroffer for Forever 21s assets.
The fast-fashion retailer which operates around 800 stores worldwide with more than $3 billion in estimated annual sales had faced months-long speculation about its plan to pursue a Chapter 11 filing in September. The company was reportedly in talks with advisers and lenders to restructure its debt in June, and had discussed a pre-bankruptcy deal with Simon and Brookfield, but plans fell through shortly before the Chapter 11 filing. It will reportedly close up to 178 stores in the US and up to 350 overall, according to the New York Times, and cease operations in 40 countries.
The days of Forever 21, with its strong brick-and-mortar presence, have been numbered, thanks to the retail apocalypse, a threatening term used to describe how the internet changed consumers shopping habits, particularly affecting chain stores.
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Forever 21 Closing Stores In Bankruptcy Filing Shows Limits To Fast Fashion
By Richa Naidu, Aishwarya Venugopal
5 Min Read
– Fast-fashion retailer Forever 21 filed for bankruptcy late on Sunday, joining a growing list of brick-and-mortar companies that have seen sales hit by the rise of competition from online sellers like Amazon.com Inc and the changing fashion trends dictated by millennial shoppers.
Forever 21 Inc, the privately held company that helped popularize trendy and cheap clothing, has fallen out of favor with shoppers, in part due to other retailers like Sweden H& M and Spains Zara that churn out affordable styles similar to those recently seen on designer runways.
Younger, more environmentally conscious shoppers are also choosing brands that ethically source garments instead of retailers that use cheap fabrics to make T-shirts that are snapped up for $5. Resale sites like thredUp.com, which calls itself the largest online thrift store, are also growing in popularity.
Forever 21, which has 815 stores in 57 countries, said the restructuring will allow it to focus on the profitable core part of its operations and shut stores in some international locations.
It has requested court approval to close up to 178 U.S. stores outside of its major markets.
On its website on Monday, Forever 21 sales included tops that started at $3 and dresses, handbags and jewelry and pants for $20 and under.
Related Coverage
She said the chain did little to differentiate itself from others.
Survival Of The Fittest
The decline of traditional brick-and-mortar shops is not a new phenomenon. Its generally believed to be a result of consumers shifting online, stimulated by the rise of e-commerce giant Amazon . But whats less obvious is why some retailers have managed to survive the retail apocalypse, while others havent.
While 75,000 retail stores are expected to close shop by 2026 according to UBS, a separate report from research and advisory firm IHL Group found that more chains are opening new locations than closing them.
These include companies like Ulta Beauty , Dollar Tree and 7-Eleven, which are seeing healthy expansion.
The two key reasons why some retailers are able to weather the headwinds were that they didnt hold too much debt and didnt expand too quickly in the past decade, the IHL Group stated.
Retailers without these characteristics have continued to thrive in this market, the report noted, adding that when a retailer closes a lot of stores, it is more of an indictment on the individual retailer rather than an overall retail industry problem as has often been reported.
Beahm disagreed.
I don’t know that the number of stores counts so much as let’s say the number of square feet per store, said Beahm. What you’re seeing is, as consumers are changing their buying habits from shopping purely in brick-and-mortar to buying more online there’s less need to carry the merchandise.
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Forever 21 Files For Chapter 11 Bankruptcy
| DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING
Financier Worldwide Magazine
Forever 21 has become the latest high-profile retailer to file for Chapter 11 bankruptcy protection. The California-based company filed for bankruptcy protection in the US Bankruptcy Court for the District of Delaware, listing both assets and liabilities in the range of $1bn to $10bn.
The company will now begin a process of restructuring which will likely see several of its locations close. In September, Forever 21 announced its intention to exit Japan and close all 14 of its store locations in the country by the end of October. The company now expects to focus on the profitable core part of its operations and shut some, if not most, of its international locations, though its operations in Mexico and Latin America will likely remain open. The company does not expect to close locations in major US markets, though there will be many store closures elsewhere.
To facilitate its restructuring, the company has obtained $275m in financing from its existing lenders, with JPMorgan Chase Bank, N.A. acting as agent, as well as $75m in new capital from TPG Sixth Street Partners, and certain of its affiliated funds.
Forever 21 saw its revenue fall to $3.3bn in 2018, down from $4.4bn in 2016. The restructured company expects to bring in $2.5bn in annual sales. The company employs about 32,800 people, down from 43,000 in 2016.
Star Soprano Jessye Norman Dies
American opera legend Jessye Norman died this week in New York at the age of 74.
Norman was born in segregated 1945 Georgia, into a musical African-American family. She began listening to opera on the radio in her childhood and got a degree in music from Howard University in Washington, D.C. From the beginning of her career on stage in the 1960s, she was hailed as a special talent, with critics acclaiming her commanding stage presence and the lush soprano voice she brought to roles in theaters in Europe and the United States. She appeared at the Metropolitan Opera in New York more than eighty times. In 1992, a New York Times reviewer vividly, and accurately, referred to her singing as a grand mansion of sound.
Norman was also a perennial award-winning artist, having to her credit multiple Grammy awards, including one for lifetime achievement, the National Medal of Arts, and a Kennedy Center Honor. She was selected to sing La Marseillaise at the Place de la Concorde in Paris for the two-hundredth anniversary of Bastille Day, and at the presidential inaugurations of Ronald Reagan and Bill Clinton.
In her later years, Norman wrote her memoir, Stand Up Straight and Sing! and founded the Jessye Norman School of the Arts to provide free after-school music programming for children in Augusta, Georgia, where she grew up. A true American original, Norman’s talent was a gift to the whole world. She will be greatly missed. Margaret Brady
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Businessaugust: Clothing Store Forever 21 Weighs Bankruptcy Filing
“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,” Executive Vice President Linda Chang said in a statement Sunday night.
Forever 21 is a nearly ubiquitous presence in American malls, which are struggling as shoppers increasingly take their business online. Dozens of large retailers have filed for bankruptcy protection in the last three years, including Sears, Gymboree, Claire’s, Nine West and Payless Shoe Source.
In its statement, Forever 21 said it would use the bankruptcy proceedings “to rightsize its store base and return to basics that allowed the company to thrive and grow into the fast fashion leader.”
Why Forever 21 Filed For Bankruptcy
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YouTubers love Forever 21. Take, for instance, Kayleigh Noelle, a beauty and fashion vlogger with nearly 700,000 subscribers. This spring, she posted her Forever 21 Try On Haul video, gushing, Forever 21 is super affordable and some pieces I still have in my closet from many seasons ago. I am and have been a huge fan of their clothing for years.
Kayleigh and lots of other tweens, teens and twenty-somethings are wearing their fave Forever 21 faux suede crop tops and high-rise skinny jeans this week in tribute to the troubled retailer, which just announced that it has filed for Chapter 11 bankruptcy protection. In a statement Linda Chang, the companys executive vice president, said, This was an important and necessary step to secure the future of our company.
The good news for deal-loving fashionistas who are headed to the mall: Forever 21 is not going away at least, not yet. But the well-known retail store is making changes.
Here are some details to help decipher the business behind the Forever 21 bankruptcy:
Moving forward, the shoppers and analysts will be watching to see if Forever 21 is able to reorganize its business over the next several months and emerge successfully from Chapter 11 bankruptcy as a stronger, more competitive enterprise that is better positioned to prosper for years to come.
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Police Rescue Women From Baby Factory In Nigeria
Nigerian police announced this week they’d busted a suspected child-trafficking ring, and rescued 19 pregnant teens and women who were being victimized.
The mothers, some as young as 15, were being held in multiple locations in the Nigerian city of Lagos. Some told authorities they’d been kidnapped others had come voluntarily seeking work as domestic servants, only to discover the true nature of their new work later on. The traffickers were reportedly impregnating the women and selling male babies for more than $1,300, while baby girls were sold for around $800.
Four children were also rescued in the police raid, and authorities are still trying to determine where they came from and who their parents are. Efforts are underway to help the rescued women find adequate housing. Two women have been arrested, but one major suspect is still at large.
Sadly, the discovery of so-called baby factories is not an uncommon occurrence in Nigeria, where it is also called child harvesting. A thriving black market exists due to social stigmas surrounding unwed pregnancy, infertility, and adoption. Last year more than 162 children were found in illegal orphanages. We are heartbroken for the Nigerian mothers who have been exploited in the most nightmarish manner imaginable, and for their children who have been treated like chattel. They deserve the swiftest possible justice. MB
Craig Patterson Of The U Of A School Of Retailing Says Forever 21 Will Likely Be Forgotten
As youthful and ageless as Forever 21 appears, they couldnt stay forever young as their time in the Canadian market comes to a close.
The retailer filed for bankruptcy in the United States on September 29 and announced it would close all Canadian stores.
With the closure of Forever 21 stores and other fast fashion icons across Canada, we sat down with expert Craig Patterson director for the University of Alberta School of Retailing and retail analyst to discuss why its happening here in Canada, and what effect it has on the industry.
Responses have been edited for length and clarity.
The Gateway: In your opinion, why is Forever 21 closing its doors in Canada?
Patterson: It would have been difficult for Forever 21 to stay open the chain was not performing very well overall in Canada in terms of sales. I had been provided some of the sales numbers for stores in Canada and they were doing extremely poorly, to be honest. Some stores were doing under three million dollars a year. Even in good malls, they were doing less than two million dollars a year in sales. This might sound like a lot of money but when you look at the size of these stores, that might be what they were paying almost in rent. In other words, this was not a retailer that was very successful in Canada, or I suppose almost anywhere else, given how the company in the U.S. had to file for creditor protection as well.
What do you think this says about the world of fast fashion?
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Forever 21 Announces Tentative Deal To Come Out Of Bankruptcy Stay Open
The deal would allow it to keep stores and e-commerce operations open.
News headlines today: Dec. 23, 2020
Fast-fashion chain Forever 21 announced it reached a tentative $81 million agreement with a buyer to come out of bankruptcy and keep its retail and e-commerce stores open.
“Forever 21 filed a motion with the bankruptcy court seeking approval to sell the Forever 21 business to a new owner,” Forever 21 told ABC News in a statement Monday.
“Once approved the agreement will allow Forever 21 to come out of bankruptcy, keeping its headquarters, stores and E-commerce operations open, providing fashions and trends that customers know and love for years to come,” the statement added.
In a bankruptcy motion, the company revealed Simon Property Group, Brookfield and Authentic Brands Group, and others were among a coalition of buyers bidding $81 million to purchase the once-iconic mall staple.
The mall owners Simon Property Group and Brookfield are among Forever 21’s biggest landlords, the Wall Street Journal reported. Authentic Brands Group is the company that recently swooped in and bought the iconic New York City-based retailer Barneys after it filed for bankruptcy
The Quality Of Forever 21s Products Took A Hit
Among the reasons Forever 21 is at risk of going under is the brands declining quality, Stacey Widlitz, president of SW Retail Advisors, told the Associated Press. And Widlitz isnt the only one who has noticed this. Consumers have taken to social media to voice their frustrations with the brands clothing. Forever 21s quality trash, one shopper tweeted. Another consumer noted the brands clothing and poor quality.
In the companys bankruptcy filing, Forever 21 itself even acknowledged its declining quality, according to CNBC. Although many think the companys accelerated expansion is mostly responsible for causing its downfall, Bill Read, executive vice president of leasing, acquisitions, and business development at Retail Specialists in Birmingham, Ala., has a different opinion. I think is more a victim of people not wanting their clothes to fall apart, he told the publication. But I think they can survive if they right-size the ship and keep their better stores.
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I’ve Been Discouraged From Shopping At Forever 21 Since I Learned About Its Ties To Sweatshops And Climate Change
Despite Forever 21’s various controversies, I wasn’t truly discouraged from shopping there until I learned that the chain has long been accused of exploiting workers and harming the environment.
In 2001, for example, the Asian Pacific American Legal Center sued Forever 21, the Los Angeles Times reported. The lawsuit said 19 workers were hired to sew, iron, and pack clothing for the brand, and did so six days a week for less than minimum wage. The legal center also alleged that Forever 21 altered the workers’ time cards, and fired those who complained.
The Los Angeles Times later reported in 2004 that the lawsuit had been settled, though no terms of an agreement between the brand and workers were disclosed. Instead, Forever 21 admitted to no wrongdoing. Larry Meyer, a previous chief financial officer for Forever 21, told the outlet at the time that the brand was looking forward “to improve working conditions in LA.”
By 2012, however, the brand’s business practices seemingly hadn’t improved. First, a lawsuit filed that January claimed the brand took advantage of high-school-aged workers. Then, in the fall, Forever 21 reportedly declined to join other retailers in a commitment against buying cotton from Uzbekistan factories, where forced child labor allegedly took place, according to a Business Insider article from 2012.
To err on the safe side, I personally now prefer to avoid purchasing from brands like Forever 21 as much as possible.
