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Comings & Goings: Forever 21 Sees Red & Bebe Hangs On

Forever 21 and Bebe illustrate the truism of today’s retail: Full-line stores are contracting as discount outlets continue to thrive.

Forever 21 expands F21 Red concept

Forever 21 announced plans to more than double its budget concept on Wednesday. The fast fashion retailer will open 40 new F21 Red locations across the country this year. The first stores will open in April in San Antonio, Texas, New York City’s Bronx borough and Chicago.

“F21 RED expansion represents an important and exciting opportunity for our growth plan, and will allow us to bring a wide variety of product at competitive prices to new regional areas for our increasing customer base,” said Linda Chang, VP of merchandising at Forever 21.

The F21 concept launched in 2014 as a destination for trendy, inexpensive basics.

The expansion isn’t a surprise given that off-shoots—and especially off-price—retail has been the only consistent winner in the battle to survive. Macy’s plans to expand its Backstage concept in 30 stores this year. Nordstrom is to add 15 Nordstrom Rack locations on the strength of its off-price model, for which it saw a sales increase of 11 percent in fiscal year 2016. As for lower priced off-shoots, Old Navy, Gap’s less expensive brand, has been the bright spot in the overall portfolio, as the namesake chain and Banana Republic lose ground. The division saw a modest 1 percent gain in comp stores for fiscal year 2016, compared to losses at both Gap and Banana Republic. Old Navy also achieved its fifth consecutive year of net sales growth. Accordingly, the company will open more Old Navy locations while shuttering Gap stores this year.

Bebe shrinks footprint

The struggling Bebe chain, which had been expected to close all locations, has instead announced it will shutter 21 doors, or 12 percent of its fleet.

The store closings will cost the company $2 million in impairment charges and $7.4 million in termination payments to landlords.

The company reported comp store stores were down by 10.5% in the second quarter, ended Dec. 31, 2016. At the time of the earnings report, the CEO noted the company was working to modify its assortment to fit consumers’ taste for casual wear.

Bebe said it is continuing to explore options with regard to its remaining stores. It’s a familiar story these days—one that doesn’t typically end well. Wet Seal and The Limited also began by closing doors to manage expenses but they ultimately were forced to file for bankruptcy shortly thereafter.