Forever 21 Reportedly Preparing For Potential Bankruptcy Filing

Roommates, Forever 21 might be next in line to file for bankruptcy, according to reports. Apparently, the retailer’s efforts to crawl out of debt have turned out to be unsuccessful, and bankruptcy might be its last resort.

According to CNBC, Forever 21 has been exploring various options to increase revenue, while struggling with its business. Those efforts, though, have led to nothing but brick walls, making bankruptcy even more of a reality. A bankruptcy filing could potentially get rid of stores that are not making money, and restructure the business to increase cash flow.

For years, retailers like Forever 21 have struggled, and even been forced to go out of business. Stores predominantly located in shopping malls, like Charlotte Russe, fall subject to the decrease in traffic that malls are seeing.

“As sales decline, the companies are still weighed down by large, expensive store uses even as the retailers need to invest in technology to fend off competition from new brands born online.”\

The news of the filing may come as a surprise to consumers, as Forever 21 dominates many other retailers when it comes to their real estate. The retailer has more than 815 stores globally, and online sales are not doing too bad.

If a the company goes through with the  process, Forever 21 would likely be reinventing the brand with a decrease in the number of physical stores the company has.

Forever 21 is one of many retailers renting from Simon Property Group, which has bailed out many of its retailer partners from previous bankruptcy cases. In fact, Forever 21 is the seventh-largest tenant with Simon, bringing in a significant amount of rent to the landlord. F21 has 99 stores across Simon’ portfolio.

Simon previously helped buy Aeropostale out of bankruptcy court about three years back, and may find themselves pulling strings all over again for F21.