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Forever 21, the super popular teenage clothing chain has filed for Chapter 11 bankruptcy on Sunday. The chain said it is planning to overhaul its global business, closing between 300 and 350 stores, including as many as 178 in the United States. It also plans to exit "most of its international locations in Asia and Europe." The company, which currently has 549 US stores and 251 in other countries, will continue to operate in Mexico and Latin America.
Linda Chang, executive vice president for the company, said in a news release that filing for Chapter 11 is "an important and necessary step to secure the future of our Company, which will enable us to reorganize our business and reposition Forever 21."
Forever 21 said it has obtained $275 million in financing from JPMorgan Chase (JPM), as well as $75 million in new capital from TPG Sixth Street Partners that would allow it to operate "in a business as usual manner" during the restructuring. Its Canadian subsidiary has also been granted protection from creditors.
The retailer is just the latest to run into trouble amid the rise of online shopping that has cut foot traffic to malls and brick-and-mortar stores. High debt levels and rent costs have also burdened traditional retailers.
Forever 21 was founded in 1984 in a small Los Angeles store by South Korean immigrants Do Won Chang and his wife, Jin Sook. The chain expanded quickly in suburban malls and catering to young girls and women with a mix of inexpensive basics.
The chain built massive stores, like its four-story, 90,000-square-foot flagship with 151 fitting rooms in the heart of New York's Times Square. And while many retailers started paring back their network of stores in recent years, Forever 21 kept adding stores as recently as 2016.
Wet Seal, American Apparel and Delia's filed for bankruptcy and closed all their stores during the last five years. Aeropostale filed for bankruptcy in 2016 but has kept some stores open.