WASHINGTON (dpa-AFX) - Fashion retailer Forever 21 Inc. is preparing for a potential bankruptcy filing due to failure in its turnaround plans, Bloomberg reported citing people with knowledge of the plans.
The clothing store for millennial shoppers was founded in 1984. It currently operates more than 800 stores in the U.S., Europe, Asia and Latin America.
The company has been working with a team of advisers to help restructure its debt. It has been trying for additional financing, but talks with possible lenders haven't seen any positive result.
The retailer now aims to secure a potential debtor-in-possession loan to take the company into Chapter 11. Through a bankruptcy filing, the retailer would be able to close unprofitable stores and recapitalize its business.
For mall owner Simon Property Group Inc., Forever 21 is its sixth-largest tenant excluding department stores, with 99 outlets covering 1.5 million square feet.
Majority of retail stores are going through tough times amid changing consumer habits as well as ever-increasing online competition from industry majors such as Amazon and Walmart.
Jewelry and accessories retailer Charming Charlie Holdings recently filed for bankruptcy protection again, with plans to close down all remaining 261 stores.
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