Forever 21 is Closing All of its Canadian Stores After Filing for Bankruptcy
The company filed for Chapter 11 overnight
After months of speculation, Forever 21 has officially filed for bankruptcy.
The brand confirmed the news overnight, saying that it will entirely cease operations in 40 countries, including Canada, and will shutter 350 stores in total worldwide, 178 of which are in the US, reports The New York Times. It will however continue to operate online as usual.
As for what has prompted the move, Linda Chang, the executive vice president of Forever 21, told the site, “The retail industry is obviously changing – there has been a softening of mall traffic and sales are shifting more to online.” Couple that with changing consumer attitudes towards fast fashion and it’s a bleak outlook for brands like Forever 21.
According to the Times, the company’s revenue dropped to USD$3.3 billion last year down from USD$4.4 billion in 2016.
In recent months, the brand has been plagued with other financial issues, too – most notably, being sued by Ariana Grande for using her likeness in an advertising campaign after negotiations with the singer fell through. As part of the $10 million lawsuit, Grande is seeking damages for copyright and trademark infringement, false endorsement and violating her right of publicity.
The brand was started in the 1980s by Do Won and Jin Sook Chang (both of whom are still running the company). Linda, the pair’s daughter, reiterated that the Chapter 11 filing isn’t the end for the company. “What we’re hoping to do with this process,” she said, “is just to simplify things so we can get back to doing what we do best.” Chang also praised her parents for their work in creating the business. “My parents built an amazing brand. When you think of fast fashion, there’s really only a handful of names that come top of mind for most people, and to be in that top list is a pretty amazing feat.”