Coresight Research believes that there will be another wave of retail closings in 2025, because inherited companies are faced with incessant competition.
Hundreds of American Forever 21 stores Close by the end of March after overwhelming years of economic pressures and incessant competition in the rapid fashion space.
F21 OPCO, the operator of Forever 21 stores and brand licensee in the United States, filed a bankruptcy court for the Delaware district for the second time in six years on Sunday.
Forever 21 likely to close the remaining stores with a second bankruptcy
“We were unable to find a lasting path, given the competition for rapid foreign fashion companies, which were able to take advantage of the minimis exemption to undermine our brand on prices and the margin, as well as the cost increase, costs, costs, costs, Economic challenges Impact on our main customers and evolution of consumer trends, “said Brad Sell Brad Sell F21 Opco in a press release.
The company said that even if it has completed its American operations, it continues to search for a buyer for all or part of its assets. Sarah Foss, a lawyer expert in bankruptcy and head of legality at Debtwire, believes that it is “unlikely that a white knight emerges to buy all or part of his retail locations”.
Buyers are walking in downtown San Francisco as they take advantage of post-Christmas sales on December 27, 2007 in San Francisco, California. (David Paul Morris / Getty Images / Getty Images)
According to court documents, the store closing process is already underway with the first wave of the least efficient locations of Forever 21, the closing by the week of March 30.
According to court documents, the closures will have an impact on around 236 stores will be assigned during the first wave of closures, because the company said that it is “unlikely that a third party is interested in acquiring these locations within the framework of an active transaction”. The remaining stores are expected to close their doors for good by May 1.
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Foss underlined how the fast -fashioned retail chain has continued to take up challenges since its first trip thanks to bankruptcy in September 2019, when the company closed more than 1004 stores and sold the rest to a buyer consortium.
Forever 21 owners Authentic Brands Group and Simon Property Group, created a joint venture, SPARC Group, to keep the company in life in 2019. In January, SPARC Group joined forces with JCPENNY to form a new organization, Catalyst Brands.
A panel announcing a store -scale sale is displayed in a window in a Forever 21 store which has prepared to close on February 20, 2025 in San Francisco, California. (Justin Sullivan / Getty Images)
The fashion retailer joins the low -cost goods of the retail chain of retail Party City and the sewing and craft retailer Joann, who all filed a protection request again. There have been 20 deposits of Chapter 11 since the beginning of 2024, but 25 retail channels have had at least two bankruptcy files since 2016, according to Debtwire Data.
“Brick and mortar retailers like Forever 21 operate in a highly competitive retail environment where the business cost is expensive and increases with inflation rates,” said Foss, adding that “the final nail in the coffin for a low -cost fast fashion retailer like Forever 21 must compete with competition with competition with competition with competition with competition with competition with competition with competition with competition Ultra low -cost online retailers Like Shein and Temu who are able to take advantage of the minimis exemption from the goods assessed by $ 800 from import duties and prices. “”
Shein and Temu offer a range of low -cost products and clothing. Companies are confronted with criticism of work practices, environmental concerns and business ethics such as intellectual property violation.
A Forever 21 store in New York, United States, Friday, February 7, 2025. (Yuki Iwamura / Bloomberg via Getty Images / Getty Images)
John Mercer, responsible for global research for CoreSIGHT research, also underlined how the competitive pressures of these rapid fashion platforms, which have increased in recent years as Inflationist consumers Cheap prices will continue to lead to a wave of retail closings in 2025.
The company estimated that there will be 15,000 closures this year. The company also projected around 5,800 store openings this year, but leads to net loss.
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However, Foss said that does not mean the end of the business.
The brand and intellectual property of the company, which belongs to a subsidiary of Authentic Brands Group, is not part of bankruptcy and will live in one form or another, said Foss.
