Shuttering all Canadian stores

Fast-fashion retailer Forever 21 filed for bankruptcy late on Sunday, joining a growing list of brickand-mortar companies that have seen sales hit by the rise of competition from online sellers like Amazon.com Inc and the changing fashion trends dictated by millennial shoppers.

Forever 21 Inc, the privately held company headquartered in Los Angeles that helped popularize trendy and cheap clothing, has fallen out of favour with shoppers, in part due to other retailers like Sweden’ H&M and Spain’s Zara that churn out affordable styles similar to those recently seen on designer runways.

It employs about 6,400 full-time and 26,400 part-time workers, U.S. court filings show. Forever 21 said it expects to exit most of its outlets in Asia and Europe, and it will shut all of its 44 Canadian stores, according to company statements.

The plan could see the chain maintain stores in the U.S., Mexico and Latin America, but an “orderly wind-down” of all Canadian locations is underway. The company has been granted protection under the Companies’ Creditors Arrangement Act, the chain said.

Forever 21 Canada has 44 stores in Alberta, British Columbia, Manitoba, Ontario, Quebec and Nova Scotia and employs about 2,000 people, the company said.

“We had hoped for a different outcome, but after years of poor performance and challenges set forth by the headwinds facing the retail industry today, our Canadian operations are simply no longer economically viable,” Bradley Sell, chief financial officer of Forever 21 Canada, said in a news release.

All of the Canadian stores will close before the end of the year.

Forever 21, which has 815 stores in 57 countries, said the restructuring will allow it to focus on the profitable core part of its operations and shut stores in some global locations. It has requested court approval to close up to 178 U.S. stores outside of its major markets.

Gabriella Santaniello, founder of retail research firm A-line Partners, said the bankruptcy would likely create pressure on other clothing retailers as Forever 21 slashes prices to clear inventory.

She said the chain did little to differentiate itself from others. She noted customers “want sustainability, they want to feel represented and I don’t think Forever 21 particularly stood for any of this.”

Retail analysts said its low prices and extremely large stores may also be a cause of its financial woes.