Rue 21 to shutter 400 stores
Rue 21 is the latest mall chain to face widespread closures, as the teen retailer recently announced it will be closing 400 stores nationwide. Those closures will join the 14 locations across the U.S. that have already shut their doors.
At the moment, Rue 21 has 1,200 stores in 48 states. In a Facebook post regarding the closure, a spokesperson for the retailer said, “We are closing unprofitable stores across our fleet in order to focus on our many hundreds of highly profitable location.”
The company will also work with lenders to “to find the best solution to the company’s need for more capital and for a business model with less debt,” the spokesperson for the chain told WWD. Rue 21 made forbearance agreements with its lenders earlier this year, which will expire later this month. The company has not said if it will seek an extension from its lenders.
Other major chains to face widespread store closures include fellow teen retailers Abercrombie & Fitch and Aéropostale, and major department stores such as Macy’s and J.C. Penny. Many of those companies have cited the need to close physical stores in order to cut costs, but as New York reports, the Census Bureau found that online shopping makes up just 8.1 percent of retail sales. Nasty Gal, primarily known for its online shop, was also recently forced to declare bankruptcy and close its two brick and mortar stores.
Rue 21 previously filed for bankruptcy in 2002 while under the name Pennsylvania Fashions Inc. It then changed its name and went public the following year. Private equity firm Apax Partners acquired the company for $1.1 billion in 2013, but the teen mall chain has been rumored to be facing another round of bankruptcy for months. Rue 21 faces stiff competition from growing chains such as H&M and Zara.
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