(CBS NEWS).– Forever 21, a one-time destination for shoppers that fell victim of its own rapid expansion and changing consumer tastes, filed for Chapter 11 bankruptcy protection Sunday. The privately held company based in Los Angeles said it will close up to 178 stores.
The company once had more than 800 stores in 57 countries. According to a press release, Forever 21 obtained $350 million “to facilitate restructuring”: $275 million from JP Morgan Chase and $75 million from TPG Sixth Street Partners.
“This was an important and necessary step to secure the future of our Company, which will enable us to reorganize our business and reposition Forever 21,” Linda Chang, Executive Vice President of Forever 21, Inc., said in a statement.
Forever 21 joins Barneys New York and Diesel USA in a growing list of retailers seeking bankruptcy protection as they battle online competitors. Others like Payless ShoeSource and Charlotte Russe have shut down completely.
So far this year, publicly traded U.S. retailers have announced they will close 8,558 stores and open 3,446, according to the global research firm Coresight Research. That compares with 5,844 closures and 3,258 openings in all of 2018.
Coresight estimates the store closures could number 12,000 by the end of 2019.
Forever 21 was founded in 1984 and, along with other so-called fast fashion chains like H&M and Zara, rode a wave of popularity among young customers that took off in the mid-1990s.
The company’s popularity grew during the Great Recession, when shoppers sought fashion bargains.
But over the last year or so, fast fashion has fallen out of style. Young customers are losing interest in throw-away clothes and are more interested in buying eco-friendly products.