- Kristopher Fraser |
Retail's spring of discontent continues, with another company announcing a round of store closures. Rue 21, the trendy teen retailer, has confirmed via their Facebook page they will be closing hundreds of stores amid lender talks. Around 400 stores are expected to close, with 14 having already gone dark.
“As part of our ongoing business transformation into a more cost-efficient operator, we are closing unprofitable stores across our fleet in order to focus on our many hundreds of highly profitable locations,” the spokeswoman for the company said to WWD.
Rue 21 operates around 1200 stores in 48 states.
Rue 21's financial state is less than favorable, and store closures were a clear reaction to that. This decision comes two weeks after they entered into forbearance agreements with lenders to stave off a default. It is unknown at this time whether or not an extension is being considered.
Without further forbearance, Rue 21 might be forced to enter bankruptcy.
The company previously entered bankruptcy in 2002 when it was under the name Pennsylvania Fashion's Inc. In 2003, they emerged under the name Rue 21 and went public a year after that. In 2013, Rue 21 was acquired by Apax Partners for 1.1 billion dollars.
Rue 21's biggest problem is that it has lost ground to competitors like H&M, Forever 21 and Zara. As teens opt for these easily affordable fast-fashion brands, companies like Rue 21 are struggling to keep up. Like other brands once popular among teens, such as Wet Seal, Rue 21's moment of economic crisis has struck. As for whether or not it can overcome its economic strife, we will just have to watch and see.photo: via Rue 21 Facebook