Sep 30, 2019

Forever 21 files for bankruptcy

Shoppers walk past a branch of Forever 21 store in central London. Photo: Steve Taylor/SOPA Images/LightRocket via Getty Images

Forever 21 said in a statement Sunday night it had filed for Chapter 11 bankruptcy protection and would close a number of stores in the U.S. and across the world. Most stores in Asia and Europe will close, but it would continue operations in Mexico and Latin America.

Why it matters: The Los Angeles-based "helped popularize fast fashion in the United States with its bustling stores and $5 tops," the New York Times notes. Per Axios' Future reporter Erica Pandey, the trend is increasingly coming under fire because it’s creating uncurbed waste and exacerbating retail's environmental harm.

Our thought bubble, from Axios chief financial correspondent Felix Salmon: Forever 21 remains a force to be reckoned with in the U.S. and across the Americas. It expanded too fast, especially internationally, and it will now operate fewer stores in fewer countries. But the fact that it just raised $350 million in new money proves that it's far from dead.

The big picture: Per AP, the Los Angeles-based firm operates about 800 stores across the world, including over 500 in the U.S. The retailer expects to close up to 178 stores in the U.S. and up to 350 overall, according to the Times.

  • There had months of speculation about the fashion retailer's restructuring, as the fashion retailer’s cash dwindled and turnaround options looked scarce.

What they're saying: Jon Goulding, an executive at the consultancy Alvarez & Marsal who will be Forever 21’s chief restructuring officer during the proceedings, told the NYT he believes the retailer could renegotiate many of the U.S. stores' leases.

  • Forever 21 executive vice president Linda Chang said in a statement, "This was an important and necessary step to secure the future of our Company, which will enable us to reorganize our business and reposition Forever 21."

Go deeper: Faster and cheaper online shopping means a steeper climate cost

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Illustration: Aïda Amer/Axios

In an effort to revive shuttered main streets and empower mom-and-pop stores, a number of U.S. cities are passing laws to limit the rapid expansion of dollar stores in their neighborhoods.

Why it matters: Around 14 million people live in food deserts, per the USDA. Experts say one contributor to the crisis is the meteoric rise of dollar chains, which are popping up on every street corner, crowding out other retailers and grocers, and very rarely selling fresh food.

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Barneys New York in talks for a $268 million rescue investment

Sharon Khazzam jewelry on display at Barneys New York. Photo: Kelly Sullivan/Getty Images

Barneys New York, the luxury retailer that filed for bankruptcy in August, reportedly is in talks for a $268 million rescue investment from Authentic Brands Group.

Why it matters: This could keep at least some of Barneys' 7 locations open, while a concurrent licensing deal with Hudson’s Bay Co. would keep the Barneys website afloat and result in Barneys mini-locations being opened inside of Saks Fifth Avenue stores.

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IPO misery

Illustration: Eniola Odetunde/Axios

Once upon a time, going public was a fun and joyous thing to do. In the late 1990s, young companies would raise money in an IPO, there would be an enormous first-day pop, everybody would start talking about you, and the combination of new money and free PR would turbocharge your business.

Flash forward: Today, it's hard to find anybody who's happy with way that companies transition from being private to being public. Even the institutional clients of the large investment banks, who can get significant allocations of coveted IPOs, are feeling the pain. Companies like Uber and Peloton have never traded above their IPO price.

Go deeperArrowOct 3, 2019