American fast fashion Forever 21 or F21 is reportedly preparing for a potential bankruptcy filing due to cash dwindles and turnaround options going down.
Before reports were circulating, F21 is still expanding worldwide, with more than 800 stores in 57 countries. The company also added a number of stores back in 2016.
According to Bloomberg, the company has been meeting with its financial advisers to get additional financial to help reconstruct its debt. However, negotiations didn’t turn out great, leaving the company with no funding to consolidate debt.
Filing for bankruptcy helps struggling companies to recapitalize the business and request for anonymity for discussing private negotiations.
Despite spreading news about its bankruptcy filing, no statement has been made by Forever 21.
Another Brick-And-Mortar Collapsing
The drop in sales from the teen clothing retailer can be attributed to people’s shift to online shopping, which Amazon capitalizes on. Forever 21 is another brick and mortar that became another victim of the rising online shopping craze.
For the last five years, several other retailers have also filed for bankruptcy including Aeropostale, Delia’s, American Apparel and Wet Seal. Despite the bankruptcy, these stores remain to operate with lesser stores open for public consumption.
The owners of the brand are immigrants from Korea, who are still managing the company. According to Forbes, the couple has a net worth of more than $1.5 billion from its company and other privately-held firms.
“We’ll work together on other distressed situations, and let’s face it, there are some out there. But we’re only going to buy into companies that, we think, have brands and that the volume that is worth doing it,” said Simon Property CEO David Simon.
This statement rings the bell of analysts about F21’s nearing bankruptcy filing. It can be remembered that Simon Property Group took a stake at Aeropostale when it is under the bankruptcy process. Now, F21 is considered one of the major tenants of the group, hence, its support for tenants facing financial troubles.