US fast fashion retailer Forever 21 is reportedly mulling a restructuring that may include store closures, and has turned to lawyers for advice.
Bloomberg yesterday (13 June) claimed the fashion retailer is looking at options to avoid bankruptcy and has turned to legal counsel Latham & Watkins for guidance. Based on data it has compiled, Bloomberg calculates Forever 21 carries about US$500m in debt in the form of a first-lien asset-based revolver that matures in 2022.
According to its website, Forever 21 is the fifth largest speciality retailer in the US. It is a private company and planned to become a US$8m business by 2017. It opened its first store in 1984 and news outlet CNBC suggests it has more than 815 stores globally today.
In a statement to just-style, a spokesperson for Forever 21 said: “Forever 21 has worked with Latham & Watkins for several years, including with our 2017 ABL negotiation and many other business deals. Our partnership with Latham is nothing new, and we are proceeding with business as usual.”
Clothing retailers are continuing to suffer from the global shift away from brick-and-mortar stores to online equivalents. In recent months, several US fashion retailers have moved to reduce their store count, with many bolstering their online presence.
Following a bankruptcy filing, Charlotte Russe earlier this year took the decision to close all 416 of its store locations.
Larger fashion retailers have also been affected by the shift in consumer trends. At the beginning of the year Gap Inc announced it would close its flagship Gap Fifth Avenue store in a bid to eliminate locations said to be “dragging down the business.”
And it is not just clothing retailers that are suffering. Retail giant JC Penney, whose portfolio includes home goods as well as clothing, last month said it would close 18 full-line stores.
Latham & Watkins did not return request for comment when approached by just-style.