Low-price fashion chain Forever 21, a once-hot destination for teen shoppers that fell victim to its own rapid expansion and changing consumer tastes, has filed for Chapter 11 bankruptcy protection.
The embattled clothing retailer said today it doesn't expect to close its Chattanooga store at Hamilton Place mall as its works its way through the bankruptcy reorganization.
Mall owner CBL Properties said that while it has 20 Forever 21 stores in its nationwide portfolio, it doesn't anticipate "significant closures."
"We've been monitoring the situation with Forever 21 closely, so today's announcement does not come as a surprise," said Stacey Keating, CBL's director of public relations and corporate communications.
Forever 21, which caters to teen-agers, said it is planning to close between 300 and 350 stores, including as many as 178 in the United States. The company, which currently has 549 US stores and 251 in other countries, will continue to operate in Mexico and Latin America.
In a letter to customers, the company said that decisions about which U.S. stores would close were continuing, "pending the outcome of continued conversations with landlords."
The privately held company based in Los Angeles said it would focus on maximizing the value of its U.S. stores and shutter certain international locations. Forever 21 plans to close most of its locations in Asia and Europe but will continue operating in Mexico and Latin America.
"The decisions as to which domestic stores will be closing are ongoing, pending the outcome of continued conversations with landlords," it said in the statement. "We do, however, expect a significant number of these stores will remain open and operate as usual, and we do not expect to exit any major markets in the U.S."
Forever 21 joins Barneys New York and Diesel USA on a growing list of retailers seeking bankruptcy protection as they battle online competitors. Others, like Payless ShoeSource and Charlotte Russe, have shut down completely.
The numbers show the crisis facing traditional retailers. So far this year, publicly traded U.S. retailers have announced they will close 8,558 stores and open 3,446, according to the global research firm Coresight Research. That compares with 5,844 closures and 3,258 openings in all of 2018.
Coresight estimates the store closures could number 12,000 by the end of 2019.
Forever 21 was founded in 1984 and, along with other so-called fast fashion chains like H&M and Zara, rode a wave of popularity among young customers that took off in the mid-1990s.
Their popularity grew during the Great Recession, when shoppers sought fashion bargains.
But over the last year or so, fast fashion has fallen out of style. Young customers are losing interest in throw-away clothes and are more interested in buying eco-friendly products. They're also gravitating toward rental and online second-hand sites like Thredup, where they see clothes worn again instead of ending up in a landfill.
These trends are happening while discounters like Target have spruced up their fashion assortments, stealing away customers.
Forever 21 has also been more vulnerable than some other chains because of its large footprints in major malls, which are attracting fewer shoppers.