Image Credit: Bloomberg

The US operator of Forever 21 Inc. is planning to close at least 200 more stores as part of an impending bankruptcy process expected to begin next month, according to sources familiar with the situation. The bankruptcy plan being discussed involves finding a buyer for the remaining stores. If no suitable buyer is found, Forever 21 will liquidate its entire chain of approximately 350 locations.

At its peak, Forever 21 had over 500 stores in the US and at least 800 worldwide. A spokesperson for Catalyst Brands, which owns Forever 21's US operations, stated that the company is exploring strategic options, including a potential sale, while also working to reduce costs and optimize its store footprint. However, no final decisions have been made yet.

Some of the stores set to close have been unprofitable for years, with the company reportedly delaying royalty and rent payments to keep them operational. The Forever 21 trademark and intellectual property are owned by Authentic Brands, which licenses them to the operating company.

That company, now under the ownership of Catalyst Brands, would go through a Chapter 11 process. Previously, it was part of Sparc Group, a joint venture between Authentic Brands and mall owners Simon Property Group and Brookfield Properties, which helped keep the chain running after its first bankruptcy in 2019.

Authentic Brands will retain ownership of the Forever 21 brand throughout any bankruptcy process. Regardless of the outcome, it plans to license the brand to other retailers and distributors.

Paraphrasing text from "Bloomberg"all rights reserved by the original author