According to people familiar with the matter, troubled retailer Forever 21 is talking to liquidators about future steps for Fast Fashion Company, which shows it is working to find a buyer as it will consider a second bankruptcy filing.
The company has been looking for buyers to avoid extinction and announced in early January that it was exploring strategic options. However, open discussions to include liquidators offer forever 21, and if buyers are not found, these proceeds can be used to repay creditors.
Forever 21 can be hard to find buyers who can successfully turn the brand around Competition from Chinese e-retailers Shein and Temu is intensifying; higher tariffs; people say that losing its cool factor, some of whom read the company’s books. Due to the sensitivity of the discussion, people spoke with CNBC on anonymity.
Forever 21 too Profitability for a long time Some say there are difficulties in managing inventory and costs.
It is unclear whether Forever 21 has hired liquidators, and even if it does, it will eventually move in that direction. Retailers can still find buyers, use them for some or all of their assets, or enter into an agreement with creditors to avoid liquidation.
Forever 21 declined to comment. BRG is reportedly a consulting firm that works with restructuring assistance and has no request for comment.
The discussion was reported in CNBC that Forever 21 had financial difficulties and asked the landlord to discuss for months. Cut rent In some locations, up to 50% of the time, as it seems to be able to control costs.
It has not considered the second bankruptcy at the time, but its position has deteriorated in the months since. It is partnership With its competitor-turned-partner Shein is also a hybrid package, which Jamie Salter, CEO of Brand Management, calls In progress In a speech last year.
People say the company is now considering a second bankruptcy filing as Forever 21’s efforts to cut costs and boost sales have been shaken. Report.
Forever 21 File for bankruptcy protection In 2019, it was later purchased By the consortium Including Authentic Brand Group and Fangdian Meng Real Estate Group and Brookfield Real Estate Partners.
The company’s first trip in Chapter 11 allowed it to restructure its balance sheet and end many expensive leases, but in the years that followed, it hasn’t managed to do it yet Fix its business and adapt Facing new competitive threats.
Once one of the Fast Fashion heavyweights, Forever 21 was almost replaced by the new Titans in that category: Shein and Temu. Online companies only embed technology and artificial intelligence into their operating models and are not plagued by expensive stores. They are good at recognizing and responding to consumer trends at such a pace that the rest of the retail industry is trying to keep up.
Since Shein is part of the Sparc Group, Operations of Forever 21some industry observers question whether e-retailers will take over their stores. Obtaining some of the assets of Forever 21 may help further legalize Shein in the U.S. and globally, as it pursues public listings in London, but those close to the company previously said it is unlikely to be because it is in physical retail. Insufficient experience in terms of.
Forever 21’s struggle shows how much the category has evolved over the past few years, and how difficult it is for others, especially those with large shop footprints that survive in the new landscape.
Shein and Temu’s amplified competition and the damage caused by e-retailers The damage and rise of retailers is similar to that of rise Amazon This has led to the shock of retailers’ bankruptcy and liquidation over the past few decades.
It also promoted the rise of brand management companies like real brands, which acquired intellectual property rights for brands and, in some cases, restored them a few years later.
However, since the real brand already owns the intellectual property rights of Forever 21, it is unclear who will be interested in acquiring the retailer. Authentic brands and similar companies are often the first to acquire the intellectual property rights of the companies seeking bankruptcy filing.
“These are usually the forwards we see in some of these retail bankruptcies,” Fox said. “So it would be fun to see who stepped up to buy 21 or one of them.”
– Other reports Lillian Rizzo from CNBC
