By Arra B. Francia, Senior Reporter
THE local operations of fashion retailer Forever 21 will not be affected by the parent company’s bankruptcy filing in the United States, according to a top official of SM Retail, Inc.
“There is no effect on our Philippine operations. Forever 21 Philippines continues to be one of the stronger global operations,” SM Retail, Inc. President and Chief Executive Officer Ponciano C. Manalo, Jr. said in a text message when asked for comment.
“My understanding is this is a streamlining of unprofitable US business, not necessarily impacting the Philippines, which is a JV (joint venture),” SM Investments Corp. Investor Relations Consultant Tim Daniels said in a separate text.
Forever 21 first entered the Philippines in 2010 through a joint venture with SM Retail. Its first branch is the one in SM Megamall in Pasig City. The company has since expanded to more locations in SM malls such as SM North Edsa in Quezon City and SM Makati.
“We will continue to offer up-to-date merchandise and are gearing up our marketing investments for the coming Christmas season,” Mr. Manalo said.
Forever 21, Inc. on Sunday said it filed for bankruptcy protection, the latest big fashion merchant who couldn’t cope with high rents and heavy competition as the shift to e-commerce cut a swathe through traditional retailers.
Court papers filed in Wilmington, Delaware, show Forever 21 has estimated liabilities on a consolidated basis of between $1 billion and $10 billion. The Chapter 11 filing allows the Los Angeles-based company to keep operating while it works out a plan to pay its creditors and turn around the business.
Forever 21 plans to exit most of its international locations in Asia and Europe, but will continue operations in Mexico and Latin America. The stores expect to honor gift cards, returns and exchanges.
Once popular among teenagers in the 2000s for its affordable but eye-catching designs, Forever 21’s signature bright-yellow shopping bags have become a rarer sight as Generation Z consumers shifted rapidly over to e-commerce and streetwear brands in recent years.
The bankruptcy filing could help Forever 21 get rid of unprofitable stores and raise fresh funds, allowing the private, family-held company to restructure its flailing business for a new generation.
Founded in 1984, Forever 21 operates more than 800 stores in the US, Europe, Asia and Latin America. — with Bloomberg