LOS ANGELES – Forever 21 has become the first major fast fashion brand to file for bankruptcy. The company, which has more than 800 stores globally, said it intends to restructure with a goal of focusing on the profitable core part of its operations. This will likely see the closure of more than half of its stores. As part of its restructuring strategy, Forever 21 plans to exit most of its international locations in Asia and Europe, but will continue operations in Mexico and Latin America. “This was an important and necessary step to secure the future of our company, which will enable us to reorganise our business and reposition Forever 21,” Linda Chang, executive vice president of Forever 21, Inc., said.
To facilitate its restructuring, Forever 21 has obtained US$275m in financing from its existing lenders with JPMorgan Chase Bank, as well as US$75m in new capital from TPG Sixth Street Partners. With this capital, Forever 21 said it intends to operate in a “business as usual manner,” honouring all existing policies, including gift cards, returns, exchanges, reimbursement and sale purchases. Forever 21 said it will use these proceedings to “right size its store base and return to basics that allowed the cpmpany to thrive and grow into the fast fashion leader.”
Chang added: “The financing provided by JPMorgan and TPG Sixth Street Partners will arm Forever 21 with the capital necessary to effect critical changes in the US and abroad to revitalise our brand and fuel our growth, allowing us to meet our ongoing obligations to customers, vendors and employees. 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.”
Kirkland & Ellis LLP is serving as the Company’s legal advisor, Alvarez & Marsal as its restructuring advisor, and Lazard as its investment banker.