THE US-based operator of Forever 21 is preparing to close at least 200 more locations from the fast-fashion retailer’s shrinking store base as part of a bankruptcy process that’s expected to kick off as soon as next month, according to sources with knowledge of the matter.
The potential bankruptcy plan taking shape would seek a buyer for the retailer’s remaining stores, said the sources, who asked not to be identified discussing a private matter. If no qualified buyer emerges, they said, Forever 21 would liquidate the entirety of its approximately 350-store chain.
At its height, Forever 21 operated more than 500 locations in the US and at least 800 worldwide.
“Forever 21’s operating company, which is the brand licensee in the US, continues to explore strategic options, including a potential sale, while also reducing costs and optimising its store footprint,” a representative for Forever 21’s operations owner Catalyst Brands wrote in an e-mail. “The efforts are ongoing and no final decisions regarding the outcome of the process have been made.”
Some of the stores slated to close have lost money for years, according to some of the sources familiar with the plans. Forever 21 has often withheld royalties and rent payments elsewhere in order to keep them afloat, one of the sources said.
The Forever 21 trademark and intellectual property are owned by apparel and lifestyle label empire Authentic Brands, which licenses them to the operating company that would undergo a Chapter 11 process.
That company – after an acquisition in January – is a unit of JCPenney- and Lucky-owner Catalyst Brands. Previously, it was owned by Sparc Group, a joint venture formed by Authentic and the mall owners Simon Property Group and Brookfield Properties, both large Forever 21 landlords, to help keep the chain alive after its first bankruptcy in 2019.
Authentic’s ownership of the Forever 21 brand would remain intact through any bankruptcy process. Authentic plans to license the brand to other existing retailers and distributors regardless of the outcome of the US operator’s potential sale or liquidation in bankruptcy, one of the sources said.
A representative for Authentic declined to comment. BLOOMBERG
