The Rue21 mall staple, which specializes in activities for the sale of clothing for teenagers, will stop its business in the coming weeks and close all its 540 stores.
Last Thursday, May 2, the mentioned company, which is based in Pittsburgh, filed for bankruptcy.
The initiation of the relevant procedure is the third in a row in the entire history of the firm. The current bankruptcy filing is the completion of the retailer’s business, which has a history of almost 50 years. Just a few years ago, the company owned 1,200 locations. However, the times of success are in the past, having given up their positions to the more severe circumstances of the present, in the space of which Rue21 faced setbacks and gradually reached the level of the downturn, leaving no other options except for the initiation of the bankruptcy procedure.
In recent years, the retailer has been exposed to several financial difficulties. This is confirmed by specific indicators, including the company’s debt, which has reached about $200 million.
The retailer previously filed for bankruptcy in 2017. At that time, it was expected that this decision would allow the company to improve its financial condition, but years later it turned out that the hopes were in vain. The retailer filed its first bankruptcy petition in 2003.
In a court filing, the interim CEO of Rue21, Michele Pascoe, stated that the factors of significant impact on the company’s position were problematic circumstances related to the coronavirus pandemic and adverse trends observed in the market, including the transition from traditional brick-and-mortar retailers to the implementation of relevant commercial activities in the online space and changes in behavior and habits in the consumer the environment. She also noted that the bankruptcy of the firm is the result of underperforming retail locations, increased competition and scaling of virtual shopping practices, macroeconomic difficulties, inflation, and problems with raising capital.
Neil Saunders, managing director and retail analyst at GlobalData Retail, says that the main reason for what happened to Rue21 was that this brand was no longer relevant for consumers belonging to the adolescent age group. According to the expert, the retailer offers products that do not have significant potential for gaining a target customer audience. In this context, Neil Saunders separately noted that teenagers are opting for cheaper and more interesting fashion platforms such as Shein.
The retailer’s stores located in 45 US states will cease operations within the next four to six weeks. Shortly, the company will launch going out of business sales. The retailer also intends to sell its brand name and other intellectual property.
As we have reported earlier, Trendy Fashion Retailer Express Files for Bankruptcy.
