Wednesday, October 2, 2019

[UPDATE] Forever 21 Proposed Closure List Includes Just Two Stores in Georgia

Forever 21, the once high flying fast fashion retailer that late Sunday filed for Chapter 11 bankruptcy, released Tuesday afternoon a list of nearly 180 stores it could close as part of its bankruptcy proceedings.  The proposed store closures amount to about a third of the Los Angeles-based retailer's overall store count.  Amazingly, only two of the stores slated for closure are in Georgia. 

Among the stores the retailer plans to close are high profile ones like those in the World Trade Center in New York, Mall of America in Minneapolis and at Beverly Center in Los Angeles, among others.  In Georgia, the two stores the retailer indicates may close are at Tanger Outlets Savannah in Pooler (near Savannah) and at The Mall at Stonecrest in Lithonia.  

Forever 21, which got its start in Los Angeles in 1984 and was initially known as Fashion 21, operates several stores in metro Atlanta including large format stores in Lenox Square in Buckhead, Cumberland Mall near Smyrna, Perimeter Mall in Dunwoody and North Point Mall in Alpharetta, among others.  

A 21,000 square foot "flagship" Forever 21 store currently under construction at Atlantic Station in Midtown is reportedly still moving forward and will open later this fall.  

The proposed list, filed in court documents, said the company doesn’t necessarily expect to close all of these locations, as talks with landlords are still ongoing to try to renegotiate leases and rents. That said, the 178 stores listed are said to be some of Forever 21′s most unprofitable, and it expects the stores will close if they are unsuccessful in their rent reduction/relief goals.  

“It’s common practice for retailers in Chapter 11 to have a large pool of stores to close, but to then use that list to negotiate lower rents,” Bill Read, executive vice president of leasing, acquisitions and business development at Birmingham, Alabama-based Retail Specialists told CNBC. “If they don’t get help, they close.  Today’s landlords are fairly sophisticated and know how to play this game... They have had a lot of practice lately.”  Read, an established commercial real estate veteran, spent 25 years with DDR (now SITE Centers) and lives locally in the greater metro Atlanta area.  

Forever 21 does not expect to exit entirely from any major markets.  Liquidation sales are expected to be completed by the end 2019 at the stores selected to be shuttered. 

Are you surprised that Forever 21 is having such problems? When was the last time you shopped at Forever 21?  Should the company really open a Forever 36 store?  

Please share your thoughts below 

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