The American consumer is thriving. Unemployment is near 50-year lows, consumer confidence is sky-high, and wages are rising at the fastest pace in years.
But that is not helping a lot of traditional brick-and-mortar retailers. The latest evidence: Forever 21 filed for Chapter 11 bankruptcy protection on Sunday.
“Essentially this allows Forever 21 to continue to operate its stores as usual, while the Company takes positive steps to reorganize the business so we can return to profitability and refocus on delivering incredible styles and fashion you love for many years to come,” the company said in a statement to its customers.
The company, which pioneered “fast fashion” in the United States, said that bankruptcy would allow it to restructure its business and that it would continue to operate its website and hundreds of stores in the United States.
“This does not mean we are going out of business,” the company said.
The company said it has $275 million in financing from its existing lenders and $75 million in new capital from private equity investors.
Forever 21’s critics say the family-owned, private company opened stores too aggressively and failed to invest adequately in online sales. The company has faced stiff competition from online retailers such as Amazon as well as fashion rental companies.