Rue21, a popular teen-apparel retailer found in malls across America, has recently filed for chapter 11 bankruptcy protection and will be closing down all of its stores.
Rue21 recently announced its plans to close all of its approximately 540 stores within the next two months. As part of this process, the company will be holding going-out-of-business sales. In addition, the company plans to sell its intellectual property.
The filing attributed the difficulties to the impact of the COVID-19 pandemic and unfavourable market trends, such as the increasing popularity of online shopping and rising inflation. Additionally, the company faced challenges in raising capital.
According to Reuters, the company has approximately $194.4 million in debt. Reuters also reported that Rue21 attempted to find a buyer for the company, but unfortunately, their efforts were unsuccessful.
Rue21 has experienced bankruptcy on two separate occasions, in 2003 and 2017, resulting in the closure of numerous stores.
Rue21’s downfall coincides with a challenging period for the retail sector. In the past two years, there has been a noticeable change in consumer buying habits due to increasing inflation. Consumers are now prioritising essential items like food and shelter, while being more cautious with discretionary purchases such as new clothes.
Last month, Express Inc., a fellow clothing retailer, filed for bankruptcy and announced the closure of 95 stores. Similarly, Joann, a fabric store, also filed for bankruptcy in March.
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