Fast-fashion chain Forever 21 Inc. is in talks with potential lenders and restructuring advisers as it explores options for turning around its ailing business, according to people familiar with the matter.
The company is exploring financing that would shore up its liquidity and ensure founder Do Won Chang maintains control, said the people, who asked not to be identified because they’re not authorized to speak publicly. It’s also spoken with Apollo Global Management about lining up potential debtor-in-possession financing if it were to seek bankruptcy, the people said.
“Forever 21 is speaking with our lenders in the normal course of business and are in compliance with all of our agreements and continue to operate as usual,” the company said via email. A spokesman for Apollo declined to comment.
The Los Angeles-based chain has opened large-format stores and expanded into new markets at a time when competitors have pulled back. Forever 21 operates hundreds of stores in the U.S., Europe, Asia and Latin America, and its international operations in particular have been a drag on business, one person said.
The family-owned company opened its first store in Los Angeles in 1984 as Fashion 21 and established itself as a destination for younger shoppers looking for trendy clothes at affordable prices. But competitors have crowded into that segment of retail, from H&M to Target to new online sellers.
Another retail upheaval could cause more pain for landlords already dealing with thousands of store closings this year in the wake of liquidations of chains such as Payless Inc. and Shopko and other pruning as even healthy retailers adapt to shifting consumer habits.
Regional mall operator Macerich Co. named Forever 21 as its second-largest tenant in its latest annual regulatory filing, accounting for 2.5% of its total rents as of Dec. 31.