Apparel retailer Forever 21 weighs bankruptcy filing

Pedestrians pass in front of a Forever 21 store in New York.

Scott Mlyn | CNBC

Apparel retailer Forever 21 is considering filing for bankruptcy as efforts to restructure its debt run dry, a person familiar with the situation told CNBC.

The retailer has been exploring restructuring options to shore up its liquidity as it struggles with its business, CNBC previously reported. Those efforts, though, have stalled, making a bankruptcy more likely.

It could not be immediately determined whether the company has begun to raise a so-called debtor-in-possession loan that would fund a potential bankruptcy, and it is still possible the company is able to avoid a filing. Bloomberg first reported news of a potential bankruptcy filing.

Many of the most troubled retailers, like Forever 21, are located in malls, where fewer shoppers are spending their money. As sales decline, the companies are still weighed down by large, expensive store bases even as the retailers need to invest in technology to fend off competition from new brands born online, like Lulus.

Forever 21’s real estate footprint is particularly large, with more than 815 stores globally. Bankruptcies are a tool retailers can use to get out of undesirable leases. Retailers like Barneys and Mattress Firm have filed for protection to downsize their footprints.

Forever 21 didn’t immediately respond to CNBC’s request for comment.


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