Forever 21–the global fast fashion empire launched from a single Highland Park storefront–could be teetering on the verge of collapse. Bloomberg reported Wednesday that the company may be preparing for bankruptcy filings. The news comes after Forever 21 was unable to reach a deal to restructure around $500 million in debt.
If the Chapter 11 proceedings do go forward, it won’t necessarily mean the immediate shutter of the chain’s 715 retail locations. Theoretically, the bankruptcy status could give the brand an opportunity to cut costs and pay off certain creditors in an attempt to stay afloat. Or, of course, the whole thing could fall apart.
Earlier this summer, Topshop closed all its U.S. stores, after going through bankruptcy procedure. As Business Insider reported in May, many of the problems that faced Topshop were remarkably similar to the pressures now hitting Forever 21. Among the concerns, a rise in competition from newer, e-commerce focused brands, the decline of in-store retail sales, and the high cost of rent for storefront real estate.
Trendy fast fashion isn’t the only type of store hit by what Vox has termed the “retail apocalypse.” Sears, Payless, Toys R Us, Claire’s, and other once-prominent chains have all been through bankruptcy in recent years, with various degrees of success. Most of those companies have found themselves owned by private equity firms; Forever 21 founder Do Won Chang has signaled he is not ready to relinquish control of what has so far remained a family-owned company.
While Forever 21 has an online presence, the 35-year-old company’s business model is still primarily oriented toward brick-and-mortar sales, which has made it vulnerable in a changing market. National Real Estate Investor estimates that, while the average Forever 21 store was once bringing in around $135 to $165 in sales-per-square-foot, now that number has likely dropped closer to $100.
And it’s not just how people, particularly young people, shop that has changed in recent years—it’s also what they want to buy. In 2019, the very concept of “fast fashion” is falling out of favor. National Real Estate Investor notes industry analysts have observed a swing toward products perceived as higher quality, more environmentally sustainable, and offered by corporations with commitments to social responsibility.