Fashion Industry'S First Wave Of Fast Approaching Fashion Giants

Forever 21 Inc., the fast fashion cheap retailer in the US, is said to be seeking to restructure its debt and enhance liquidity for reversing struggling businesses for many years.

Bloomberg quoted sources as saying that last month it confirmed that the company was withdrawing from the Chinese market to discuss financing options with potential borrowers and restructuring consultants, and has already drawn up private Holdings Company Apollo Global Management LLC to prepare the debt in possession financing for future bankruptcy reorganization.

In this regard, Forever 21 Inc. stressed that dialogue with creditors is normal business process, and the Group continues to operate as usual.

Do Won Chang and Jin Sook Chang opened the first Forever 21 (original Fashion 21) in 1984 in Losangeles, California, to sell Korean fashion clothing to the local Korean community.

The Forever 21 Inc. now has hundreds of stores in North America, Europe, Asia and Latin America, which contain a large number of flagship stores, forming huge pressure on the group's sales and profits.

As consumption patterns change and competition intensifies in the industry, retailers with larger physical burdens tend to decay faster.

Furthermore, the Forever 21 Inc. oriented youth groups generally lack brand loyalty, which indirectly leads to the bankruptcy of American youth apparel retailers such as American Apparel, A ropostale, Rue21 and Wet Seal in recent years.

In the past two weeks, a series of earnings reports of US retailers showed the most dismal retail market since the great recession in 2008.

According to the data of Retail Metrics Inc., the profit of apparel listed companies decreased by 24% in the first quarter of 2019, which is the biggest decline in the same period of 2008, which has fallen 40%.

Ken Perkins, founder of Retail Metrics Inc., points out that although consumer confidence is high, retailers who are shopping in the majority of physical businesses are facing the problem of accelerating passenger traffic decline.

Analysts believe that clothing sales are still strong, but consumers no longer patronize past shopping places.

As a private sector, Forever 21 Inc. does not disclose publicly its financial performance.

It is reported that the group achieved $3 billion 800 million in revenue in 2014 and has declined to $3 billion 400 million by 2017.

People familiar with the matter said the group's international business was weaker than domestic sales.

Following the withdrawal of Taiwan in March this year, Forever 21 Inc. confirmed in April that it had withdrawn from the 2008 mainland China's two market entry in 2011.

In Hongkong, the group moved to Mong Kok in 2016 because it could not afford Tongluowan's six tier flagship store's monthly rental of HK $13 million 800 thousand.

In recent years, together with Forever 21 Inc., China has also lost its brand names such as Topshop, New Look, Marks and Spencer Group PLC (MKS.L), Marsha general merchandise and so on. What's more, even the UK's fashion e-commerce supplier, the world's largest e-commerce group, is also struggling to compete with Chinese local businesses with cost-effective and marketing methods that are more in line with market demand and cost advantages.

Author: Lin Biying