The fast fashion and beauty retailer has been struggled to compete with pure e-commerce players
Fast fashion and beauty accessories retailer Forever 21 has filed for bankruptcy protection, giving the US company time to restructure its business.
The store chain said it plans to “exit most of its international locations in Asia and Europe, but will continue operations in Mexico and Latin America”.
Last week, the retailer announced it plans to stop trading in Japan and close all 14 stores by the end of October.
Forever 21 stocks a range of cosmetics and beauty tools, and competes against brands such as H&M and Primark, but has struggled to stave off competition from pure online players, such as Boohoo and ASOS.
In 2017, the company formally broke into beauty with the launch of its cosmetics chain Riley Rose.
Founded in 1984, the California-based retailer filed for Chapter 11 bankruptcy, which enables it postpone obligations to creditors, giving it time to reorganise its debts or sell parts of the business.
Linda Chang, Executive Vice President of Forever 21, described the decision as an “important and necessary step to secure the future” of the company.
Forever 21 received US$275m in financing from its existing lenders, with JP Morgan as agent, as well as $75m in new capital from investment firm TPG Sixth Street Partners.
With this new funding, the firm said it intends to operate business as usual by honouring all gift cards, returns, exchanges, reimbursement and sale purchases.
Chang added: “With support from our key landlord and vendor constituents, we are confident we will emerge as a stronger, more competitive enterprise that is better positioned to prosper for years to come, and we remain committed to delivering the fast fashion trends that our customers have come to expect from Forever 21.”