Fast Fashion And The Competition
Forever 21 might be known for their quick-turning duplications, but they are not alone in the fast fashion world. Competitors such as H& M and Zara have vied for the same consumer base that wants trendy clothing at an affordable or low-cost price point. Popular London-based ecommerce brands like ASOS and Pretty Little Thing have also taken a swipe at profits with their lucrative celebrity collaborations.
The Instagram famous Los Angeles-based brand Fashion Nova has also given Forever 21 a run for its money with shameless knockoff business strategy that churns out replicated designs in less than 24 hours.
Growing Awareness On The Detriments Of Fast Fashion
Weve all heard the arguments against fast fashion and seen the news about the horrible working conditions people in third world countries are put through and the lousy pay they get in return for their work in sweatshops to produce clothing for brands like H& M and Forever 21.
More and more peopleare now boycotting fast fashion and settling for brands that call themselves sustainableor have proven that their apparel is produced ethically. While often pricier, consumersare willing to pay the price and comfort themselves with the justification thattheyre at least not contributing to unethical working practices. Another thingthat might have contributed to a decrease in sales is
Forever 21 Is No Stranger To Scandal
If Ariana Grande’s $10 million lawsuit against Forever 21 was the only major controversy in which the company was involved, consumers could maybe look the other way. But Grande’s lawsuit was not at all the first time the retail giant had ruffled shoppers’ feathers.
In December 2018, Forever 21 used a white model to advertise the brand’s Blank Panther-style sweater, which offended many. Forever 21 apologized in a statement for causing offense and noted that it “takes concerns on products and marketing extremely seriously.”
Nearly two years earlier, Forever 21 released a terrifying men’s graphic tee with the statement “don’t say maybe if you want to say no” in large, bold print. Cosmopolitan dubbed the tee “horrifying” and “very rapey,” and, uh, yeah. The brand later removed the t-shirt from its site and provided a statement, apologizing for causing offense.
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Inconsistency And Lack Of Quality Control
Like many other clothingretailers, Forever 21 doesnt manufacture its own clothing, outsourcing them fromother various manufacturers instead. This often results in inconsistent sizing acrosstheir tops and bottoms despite them all having labels that say theyrethe of the same size. This leads to consumer frustrations over not being ableto fit certain outfits they like, or ending up annoyed by how two M-sizedpieces dont even fit the same.
Forever 21’s Bankrupt Shell May Stiff Creditors Of Us$200m
Jeremy Hill and Eliza Ronalds-Hannon, Bloomberg News
Closing down and sale signs sit in the widows of a Forever 21 Inc. store in London, U.K, on Thursday, Oct. 31, 2019. , Bloomberg
When Forever 21 Inc. sold itself out of bankruptcy this year, it left behind hundreds of millions of dollars in debt owed to suppliers, shippers and landlords. Now, as they seek to get repaid by the fast-fashion chains estate, its becoming clear that theyre in for some serious pain.
The U.S. Department of Justices bankruptcy watchdog is urging the judge overseeing the shell companys case to convert it to a Chapter 7 liquidation from a Chapter 11 reorganization, estimating that high-ranking creditors owed some US$250 million will likely only get 17 per cent of that money back, or less than US$50 million, according to court papers.
That puts Forever 21s case deep in the realm of so-called administrative insolvency, meaning the estate wont have enough money to fully pay bills it incurred in bankruptcy. The plight of Forever 21s creditors illustrates the risk of doing business with a bankrupt enterprise. Often painted as a controlled process, Chapter 11 bankruptcies can lead to significant losses if plans dont pan out.
Bankruptcy attorneys for Forever 21s estate didnt immediately respond to an email seeking comment.
A hearing on the attempt to convert the case to Chapter 7 is scheduled for Sept. 16 at 11:30 a.m.
The case is Forever 21 Inc., 19-12122, District of Delaware
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Ultimately The Closure Of Some Forever 21 Stores Might Make Others Rethink Their Shopping Habits
At the end of the day, Forever 21’s bankruptcy filing isn’t necessarily good news. Hundreds of employees are sure to be laid off as the company restructures and closes 178 stores in the US alone. I’ve learned from experience just how devastating this can be.
In 2018, Toys R Us folded, leaving me and more than 30,000 other employees without jobs. I can only imagine that many of Forever 21’s employees will soon face struggles similar to what I experienced, as well as difficulties that I can’t comprehend.
Thankfully for some of the brand’s employees, some Forever 21 stores will remain open. The company will also not be shuttering as a whole.
What Forever 21’s bankruptcy announcement actually shows is a shift within the fashion industry. It proves that the brand’s target audience teens and young adults isn’t easily swayed by the promise of trendy clothes at affordable prices.
People no longer view fast fashion as an acceptable practice, and I’d have to agree.
Representatives for Forever 21 did not immediately respond to Insider’s request for comment.
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Fashion Retailer Forever 21 Files For Bankruptcy Protection
Firm with 290 UK staff is latest traditional retailer to struggle with shift to online shopping
The US fashion retailer Forever 21 has filed for chapter 11 bankruptcy protection, joining a growing list of companies that have failed to navigate the shift towards online shopping.
The groups UK arm, which has three stores in Birmingham, Liverpool and London, is expected to appoint the advisory company RSM as administrator on Monday.
The stores, the first of which opened in 2010, employed more than 290 people, according to the latest published accounts, which cover the year to February 2017 when the business made a £61m loss on sales of £26m.
Chapter 11 provides struggling companies with protection from their creditors, giving management time to implement restructuring plans.
Forever 21s difficulties reflect the problems afflicting traditional retailers on both sides of the Atlantic. Since the start of 2017, more than 20 major US retailers, including Sears and Toys R Us, have filed for bankruptcy as more customers shift to online retailers such as Amazon.
Founded in 1984, Forever 21 has 815 stores in 57 countries. Last week, the retailer said it would stop trading in Japan and close all 14 stores there at the end of October. The company plans to leave most of its locations in Asia and Europe, but will continue to operate in Mexico and Latin America.
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Forever 21 Files For Bankruptcy Will Shutter Over 100 Stores
Forever 21, which spent years expanding the number and sheer size of its stores, is the latest … mall-based retailer to declare bankruptcy.
Forever 21, a teen apparel retailer that expanded aggressively into malls across America as others pulled back, filed for bankruptcy on Sunday evening.
The retailer ended months of speculation about the state of its business by announcing that it is seeking bankruptcy protection under Chapter 11. Forever 21 will look to close up to 178 stores in the U.S. as part of the restructuring, according to a statement from the company. It will also shutter most of its locations in Asia and Europe. It currently has roughly 800 stores worldwide.
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, said Linda Chang, executive vice president and one of the founders daughters, in a statement.
To continue funding operations during the restructuring, Forever 21 has secured $350 million in financing, which includes $275 million from its existing lender, JPMorgan Chase. It has also obtained $75 million in new capital from TPG Sixth Street Partners and its affiliates.
I came here with almost nothing, Chang told Forbes for a cover story in 2016. Ill always have a grateful heart toward America for the opportunities that it’s provided me.
Forever 21 Bankruptcy: 5 Reasons Why It May Have Happened
Forever 21 is about to start aging.
The iconic youth-focused fashion retailer announced to its customers on Monday that it indeed is filing for bankruptcy despite its attempts to quash rumors about the business development in a newsletter 10 days prior. Under the U.S. Bankruptcy Codes chapter 11, Forever 21 will remain open while it takes positive steps to reorganize the business.
Up to 178 stores will close throughout the U.S.which is sure to hurt thousands of employees who rely on the retailer for a source of income. Operations are also said to halt in 40 countries.
Forever 21 sent out a newsletter to customers on Sept. 20, telling them not to believe the “misinformed” bankruptcy rumors.
For some devoted shoppers, the announcement comes as a shock. However, a number of brick and mortar stores have struggled to keep money flowing with the rise of ecommerce juggernauts like Amazon providing the convenience of speedy shipping.
Fashion outlets that have shuttered a part of their business or have gone out of business completely include other notable mall staples like Payless, Kohls, Dressbarn, Topshop, Ralph Lauren, Lord & Taylor and more.
Here are five reasons that may have contributed to Forever 21s downfall.
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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.
She said the chain did little to differentiate itself from others.
Forever 21 Lost Its Unique Edge
Forever 21 has focused mostly on producing trendy, runway-inspired clothes, and, although Forever 21 was by no means a small boutique, the brand’s mass-produced clothing “still felt unique,” Business Insider revealed. Why? Because the retailer “only sold select styles for a limited time.”
That changed when Forever 21 started rapidly expanding. Soon its styles didn’t seem so one of a kind anymore. No, the clothes all started to blend together and look the same. “As a result, Forever 21 started to lose touch with its core customers, while competitors like H& M and Zara rose,” the publication reported. “No longer the trendsetter, Forever 21 became the butt of the joke.” Forever 21, which was once able to churn out budget-friendly runway recreations in an impressively short amount of time, also started becoming sluggish when compared to newer fast fashion retailers, like the online brand Fashion Nova.
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Hearing On First Day Motions
A hearing on the Debtors’ First Day Motions was held on October 1, 2019 at 2:00 p.m. before the Honorable Mary F. Walrath, Bankruptcy Judge, United States Bankruptcy Court for the District Of Delaware, 824 Market Street, 5th Floor, Courtroom No. 4 Wilmington, Delaware 19801. Please click below to view and download the Debtors’ First Day Motions and Orders:
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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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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.
Being In Malls Didn’t Help Forever 21
As part of Forever 21’s vast expansion plan, the brand increased its presence in shopping malls “even as foot traffic dwindled,” CBS News noted. “It also opened many big-box format stores, averaging about 38,000 square feet, despite the high overhead costs.”
Adding more locations to malls was certainly a risk and, unfortunately, one that did not pay off. “I expect store closures to accelerate in 2019, hitting some 12,000 by year end,” Deborah Weinswig, founder and CEO of retail research company Coresight, predicted when speaking to CNBC.
This doesn’t necessarily mean that malls will disappear, though. “I think this is a multiyear transition,” DJ Busch, an analyst at commercial real estate services firm Green Street Advisors, told the publication. “Cleanse out some of these retailers that lasted longer than they should have. … It’s going to be tough. Anyone who thinks otherwise is too optimistic. But it doesn’t mean this is a dead business. … It can continue to be a good business as underproductive go away, and the strong landlords invest.” While that may be good news for malls, it’s certainly not for Forever 21.
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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