Teen retailer Forever 21 Inc. plans to file for bankruptcy as soon as Sunday, according to people familiar with the matter, as slow sales, online rivals and changing consumer habits take a rising toll on many bricks-and-mortar chains.
But in a statement, Forever 21 said it has no plans to file for bankruptcy on Sunday.
“Our stores are open and it is our intention to continue to operate the vast majority of U.S. stores, as well as a smaller amount of international stores, providing customers with great service and the curated assortment of merchandise that they love and expect from Forever 21,” it said. “Please visit our store locator to find the most up to date store list.”
Retailers closed more stores from January to June—more than 7,000—than they did in all of 2018, according to a report released Wednesday by consulting firm BDO USA LLP. Many companies were hurt by a lackluster 2018 holiday shopping season, BDO found.
“The headwinds for retail are gaining hurricane force,” said Robert Feinstein, a bankruptcy lawyer who represents creditors in major retail bankruptcies, including Payless ShoeSource Inc. and Gymboree Group Inc., both of which filed for bankruptcy protection this year.
Forever 21 expanded by opening large stores at a time when consumers, especially younger ones, were going online to shop. The closely held company has been facing a cash crunch and had been searching for a new loan for months, according to the people familiar with the matter. The chain is planning to shut down some of its more than 700 stores in bankruptcy, one of the people said.
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