Forever 21 closing all Canadian stores By: Martin Cash  Posted: 7:00 PM CDT Monday, Sep. 30, 2019

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This article was published 29/09/2019 (1872 days ago), so information in it may no longer be current.

Shopping malls across Canada have another casualty on their hands.

Low-price “instant-fashion” chain Forever 21 has announced that it will close all 44 of its Canadian stores as the Los Angeles-based retailer restructures under U.S. and Canadian bankruptcy protection.

Forever 21 has two locations in Winnipeg — Polo Park and Outlet Collection Winnipeg. The retailers store is also a tenant at many other properties with the landlords of those two centres, Cadillac Fairview and Ivanhoe Cambridge, respectively.

Peter Havens, the general manage of Polo Park, confirmed that Forever 21 was one of the largest tenants in the 1.2 million square foot mall, with The Bay and Shoppers Drug Mart likely the only ones with a larger store.

Analysts say the privately-owned retailer that started in the 1980s, catering specifically to the trendy fashion tastes of young teens, grew too quickly and at the same time let its focus wander into a broader demographic base.

Some say the retailer had difficulties competing with the growing number of offerings shoppers now can find on-line.

In addition to the 37,000-square-foot hole it will have to fill when Forever 21 exits some time before the end of the year Polo Park is still in the process of finding new tenants for the old 200,000-square-foot-plus Sears store that has sat empty for two years.

Havens said negotiations are progressing and believes they are about to come up with “a good addition” to the centre.

Even though there have been a number of retail failures over the past few years, including teen-related stores lilke Charlotte Russe, Aeropostale and Wet Seal, Havens and others believe there is still plenty of time left on on the shopping mall horizon.

“The industry is changing, no doubt,” Havens said. “But there will always be that place where people want to come and gather. We are fortunate at Polo Park because it is such a destination. We always have lots of first-to-market tenants and places that will be interesting. How that all evolves over time is anyone’s guess.”

Forever 21 officials say plans are in place for an orderly wind down.

“After years of poor performance and challenges set forth by the headwinds facing the retail industry today, our Canadian operations are simply no longer economically viable,” said Bradley Sell, Forever 21 Canada’s chief financial officer, in a statement.

The company considered “numerous options” before it came to the “difficult decision to discontinue operations in Canada,” he said, adding it believes the choice to be the right one for Forever 21 Canada.

Forever 21 was granted protection under the Companies’ Creditors Arrangement Act at the Ontario Superior Court of Justice in Toronto, the company said. PricewaterhouseCoopers Inc. will serve as its monitor in proceedings.

The retailer operates 44 stores in Canada with locations in Alberta, B.C., Manitoba, Ontario, Quebec and Nova Scotia. These stores, which employ about 2,000 people, will stay open during the liquidation process, the company said, but will close before the end of the year.

“We have plans to liquidate our store inventory in the near-term,” the company said in an emailed statement.

“Canadian customers can continue to shop our curated assortment of merchandise on our U.S. website.”

The company said it would focus on maximizing the value of its stores in the United States, where it had 500 locations prior to the downsizing.

Forever 21 will also close most of its locations in Asia and Europe but will continue operating in Mexico and Latin America.

The numbers show the crisis facing traditional retailers. So far this year, publicly traded U.S. retailers have announced they will close 8,558 stores and open 3,446, according to the global research firm Coresight Research. That compares with 5,844 closures and 3,258 openings in all of 2018.

Coresight estimates the store closures could number 12,000 by the end of 2019.

The Canadian retail scene has undergone similar trends but hasn’t been an exact copy of the United States.

Payless ShoeSource closed its 248 Canadian stores after filing for bankruptcy in February. However, Toys R Us Canada continues to operate as a separate business despite the closure of its American and British counterparts.

Forever 21 was founded in 1984 and, along with other so-called fast fashion chains like H&M and Zara, rode a wave of popularity among young customers that took off in the mid-1990s.

Their popularity grew during the Great Recession, when shoppers sought fashion bargains.

But over the last year or so, fast fashion has fallen out of style. Young customers are losing interest in throw-away clothes and are more interested in buying eco-friendly products. They’re also gravitating toward rental and online second-hand sites like Thredup, where they see clothes worn again instead of ending up in a landfill.

These trends are happening while discounters like Target have spruced up their fashion assortments, stealing away customers.

Forever 21 has also been more vulnerable than some other chains because of its large footprints in major malls, which are attracting fewer shoppers.

— with files from The Canadian Press

martin.cash@freepress.mb.ca

Martin Cash
Reporter

Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.

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