Fast-fashion retailer Forever 21 filed for Chapter 11 bankruptcy protection in the US. Founded in 1984, the California-based retailer lost its way over the past five years, with experts citing changing trends and consumer tastes and missteps by the company. With increased competition, the retailer lacked the differentiation and clarity to keep it relevant. At the time of filing, the private, family-held company Forever 21 had 800 stores globally, and at its peak was doing more than $4 billion in sales annually.

“We lost our market positioning as we took our eyes off of the ball,” Linda Chang, the brand’s Executive Vice President, and daughter of Forever 21’s founders, told Vogue Business.

What Happened:

• With sales falling from $4.4 billion in 2016 to $3.3 billion in 2018 and faced with debt repayments, the business began shuttering stores but didn’t downsize fast enough to avoid bankruptcy.

Upon Filing:

• As part of the Chapter 11 proceedings, the firm says it has obtained $275MM (£224MM) in financing from existing lenders and $75MM in new capital.
• The company announced plans to shut down operations in 40 countries, closing up to 178 stores in the US and up to 350 globally.
• In November WWD broke the news that beauty concept Riley Rose, launched in 2017, was shuttering all doors and the brand website. Moving forward, the concept would live within Forever 21 stores.

Chang told Vogue Business that the brand tripped up when it stopped listening to its customers—a lesson the company will place at the center of its restructuring efforts.

Comeback Plan:

• Leases have been renegotiated with a number of stores in the US.
• Interim chief operating and marketing officers have been brought in while a concrete leadership strategy remains in the works.
• This month, Forever 21 is relaunching its online store in 30 countries with localized checkout in 21 languages with the help of Global-e. The initial focus will be Canada, Asia-Pacific, and Latin America; the service will roll out to more countries over time.
• Online sales currently make up 25% of revenue—the plan is to increase that.
• Streamlining the focus to US and South America.
• Fast growth created unforeseen supply chain complexity. Focusing on the US and South America will reduce a lot of these complexities, allowing the retailer to focus on what they do best.
• Identifying gaps in management and filling them with outside expertise.
• Merchandising assortments and store presentations will be optimized.
• Marketing will be a focus and the brand positioning will evolve, establishing a stronger brand purpose, strategy, and messaging in line with today’s consumer.
• Like competitors, they are looking across the business to be more sustainable.

For the beauty industry, Riley Rose still has promise. If Forever 21 can get back to its roots and resonate with consumers again, it will create opportunities for growth. Fresh off the sting of Barneys’ bankruptcy, the question is what brands will take the risk.

Read the full story on Vogue Business.