According to the account of someone with insider knowledge, Apparel chain Forever 21 is now looking to restructure its business as it is and has been struggling for some time with business operations. The retail giant is now in discussions with Apollo Global, a private equity organization, about the raising of debtor-in-possession capital in the event it must file for bankruptcy. The person has stated that no decision has yet been made.
Such restructuring changes are necessary as the retail industry has been on a steady decline as the popularity of online purchases increases. The fact is that the number of shoppers willing to travel to malls is decreasing and physical stores still must address expenses that form a part of operations.
Clothing retailers with a focus on teens were adversely affected and over the past few years, several them had no choice but to file for bankruptcy. These include Rue21 and Aeropostale.
The earnings that many apparel retailers are reporting can be described as disappointing at best and such terrible sustained performance has not been seen since the period of the Great Recession of 2008. Collectively, first-quarter earnings have fallen by as much as 24% according to Retail Metrics. During the Great Recession, the first quarter of 2008 saw a collective fall of 40 percent.
As the information on the happenings inside Forever 21 is confidential, the individual that provided the account requested anonymity. Be that as it may, a spokesperson for Forever 21 spoke on the situation. According to her, the retail giant is now in the process of having discussions with creditors in a normal business course, it is operating as usual, and it remains in compliance with all established agreements.
The exploration of the restructuring option by Forever 21 was initially reported on Monday, March 31, 2019.