Forever 21 weighs repeat bankruptcy filing
Summary
The company is struggling with competitive pressure in the apparel sector.
Fast-fashion retailer Forever 21 is considering filing for bankruptcy after exiting its last chapter 11 roughly five years ago, according to people familiar with the matter.
The company, with over 500 stores, is working with restructuring adviser BRG to assess possible paths to address its financial challenges, the people said. The company is also trying to find a buyer that could help the chain avoid bankruptcy, one of them said.
Mall owners Simon Property Group and Brookfield Corporation teamed up with brand licensing company Authentic Brands Group to buy Forever 21 out of bankruptcy in 2020, saving the chain from liquidation.
Owners of the Forever 21 chain announced last month that they are exploring strategic options for its operations. The retailer has faced fierce competition from China-founded online discount retailers Shein and Temu.
In a bankruptcy, the risk that Forever 21 would liquidate and shut down is high, as it is for most retailers.
Forever 21 was among a handful of struggling apparel retailers including JCPenney, Brooks Brothers and Aéropostale that the two mall owners and Authentic Brands teamed up to acquire in recent years.
Forever 21 struck a partnership with Shein in 2023, but the deal has been only a moderate success, Authentic Brands Chief Executive Jamie Salter said at a conference a year ago, according to media reports.
The deal allowed Forever 21 to sell its merchandise on Shein’s website, and Shein took a stake in the SPARC joint venture between Authentic Brands and Simon Property, which operates retailers including Forever 21.
In a reorganization announced last month, the owners of SPARC combined all of the retail operations of Aéropostale, Nautica, Lucky Brand, Brooks Brothers and Eddie Bauer with JCPenney, but left Forever 21 out of the merger.
A spokesperson for Forever 21 reiterated that the company’s owners are exploring a range of strategic options for the retailer’s operations and said that they are working diligently to achieve the best possible outcome.
BRG declined to comment.
Write to Soma Biswas at soma.biswas@wsj.com, Alexander Gladstone at alexander.gladstone@wsj.com and Jodi Xu Klein at jodi.klein@wsj.com
