It’s business as usual for fast-fashion retailer Forever 21 SA, despite its US parent filing for bankruptcy protection.
This will come as a relief to SA landlords who have had to deal with Edcon reducing its space in malls, as well as the loss of brands such as River Island and Salsa.
The US-based Forever 21 said on Sunday that it is filing for voluntary chapter 11 bankruptcy, becoming the latest American bricks-and-mortar chain to embark on restructuring as it competes with online retailers.
The global retailer said it will close up to 350 of its stores worldwide, including up to 178 in its main US market. It will exit most of its international locations in Asia and Europe but will continue to operate in Latin America, Mexico and Africa.
So far in 2019, retailers in the US have announced more than 8,200 store closings, already exceeding 2018’s total of 5,589, according to a report by Coresight Research. Further retail shutdowns are expected to pile up and may reach 12,000 by the end of 2019, Coresight said.
However, Forever 21, which was brought into SA by Dubai-based franchisee Sharaf Retail in 2014, will continue to trade at some of SA’s largest shopping centres, including Mall of Africa, Canal Walk and Nelson Mandela Square.
Sharaf Retail said it is communicating with SA landlords who have Forever 21 SA as a tenant.
Liberty Two Degrees, which owns nearly a third of Nelson Mandela Square, released a statement on the JSE’s Sens on Tuesday, saying Forever 21 continued to trade as normal. “Liberty Two Degrees is aware of the global news regarding Forever 21 filing for bankruptcy in the US. Forever 21 in Nelson Mandela Square is managed by a franchisee and we are currently engaging with this party to ascertain the impact of the global closure of stores.”
The company’s exposure to Forever 21 is limited to the one store at Nelson Mandela Square.
Morné Wilken, CEO of Hyprop Investments, which owns Canal Walk, said Forever 21 is continuing to trade there. “Things are normal right now. They have been paying their rent and haven’t indicated that anything will change.”
Attacq COO Jackie van Niekerk said the Forever 21 store at the company’s Mall of Africa is also still trading.
Keillen Ndlovu, head of listed property funds at Stanlib, said while the news about Forever 21 globally is not good, the effect on SA property will be negligible.
“There are only a handful of SA property funds with exposure and they have literally a store each. Most of the international retailers that came to SA and struggled, have closed shop and left. Some of the stronger ones left include H&M, Cotton On and Zara.”
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.