Troubled mall retailer makes hard decision amid bankruptcy rumors
The retail chain has faced a difficult past several years.
It's not hard to understand why a lot of retail chains have had trouble over the past several years.
Beginning in the early 2020s, COVID-19 took a toll on many stores across the country.
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Businesses were forced to shut down for weeks — or even months in some cases.
Lockdowns obviously plummeted foot traffic, and even when things began to reopen, shoppers weren't entirely enthusiastic about returning to shopping with the vigor they once had.
Some had to grapple with the prospect of wearing masks or queuing in line to be let in due to new social distancing protocols.
And that's before you take into consideration the rising cost of so many goods.
Now that COVID-19 is firmly behind us, high prices seem to be here to stay. According to the new CPI report, inflation is at an annual rate of 3.0%, higher than what analysts expected.
Pair that with persistently high interest rates, and few customers have the same appetite for shopping that they once did.
High prices affect malls
Once place customers had been wary of — even before covid — is shopping malls.
The once popular shopping meccas that symbolized capitalism and access have been on a decline over the past couple of decades. Shoppers now know they have access to even more goods online — and price comparing is usually much easier to do from the comfort of your couch with a keyboard and internet connection at your disposal.
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Plus, malls typically charge their tenants outsized rent in order to gain access to more foot traffic and, in theory, exposure to more sales. But when that foot traffic declines, it's harder for tenants to justify those costs.
Forever 21 makes difficult change
Such is the case with Forever 21, a popular mall retailer that mostly sells fast fashion aimed at teens and young adults.
Forever 21's struggles aren't new; it filed for Chapter 11 bankruptcy in 2019 and was sold to Authentic Brands Group, Simon Property Group, and Brookfield Property Partners for $81 million a year later.
Its struggles remain, though. The company requested rent reductions and is currently working on a revival plan that may include another bankruptcy. And now, Forever 21 is laying off almost 700 employees in the near future, according to a new report.
Over 350 of those layoffs will affect corporate headquarters employees, while the others are at U.S. stores. Some of those stores are expected to close permanently this year.
A spokesperson for Forever 21 said the company “continues to explore strategic options while also looking at ways to reduce costs across our operations and optimize our store footprint.”
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