With the rise of clothing rental services and super fast digital shopping sites, several brands are feeling the heat, including beloved mall brand Forever 21.
According to a report from Bloomberg, Forever 21 could potentially file for bankruptcy due to a decline in cash flow and failed attempts at its turnaround plans. Sources explained to the news outlet that Forever 21 has been “in talks” to receive additional funding and has been working closely with financial advisers to come up with a plan to reduce its debt, but meetings with potential lenders have been put on hold for now.
Still, the brand has been eyeing a debtor-in-possession loan, which will force the company to file for Chapter 11 bankruptcy, which allows Forever 21 to keep the business open while it addresses its financial problems. By filing for bankruptcy, Forever 21 will be able to “shed unprofitable stores and recapitalize the business,” the outlet said.
The news comes just weeks after luxury retailer Barneys announced it has filed for Chapter 11 bankruptcy and plans to close a bunch of its stores due to high rent and fewer visitors. On the other hand, mall brands like Urban Outfitters and Banana Republic are getting into the clothing rental game with the launch of Nuuly and Style Passport, respectively.