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Fast-fashion retailer Rue21 files for bankruptcy again, to shut all 500+ stores


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Rue21, the popular teen clothing brand, has filed for Chapter 11 bankruptcy. This marks the third time the fast-fashion retailer has sought protection under bankruptcy, revealing a tumultuous journey in the retail sector.

 

The company, grappling with up to $500 million in assets and an equivalent amount of debt, has announced plans to close all its 543 stores. The decision comes as a result of underperforming retail stores, macroeconomic headwinds, and the growth of online shopping. The increased competition in the industry has led to operational losses, pushing Rue21 to this drastic measure.

 

Rue21’s decision to wind down operations was influenced by the belief that liquidation would provide greater value to creditors than a going-concern sale. The company has hired Gordon Brothers Retail Partners to conduct store closing sales. This move is expected to be completed over the next two months.

 

The company’s primary demographic, tweens, teens, and young adults, are now left to seek value-priced purchases elsewhere. The closure of its stores across 45 states will undoubtedly leave a significant gap in the market.

 

In an attempt to salvage what remains, Rue21 hopes to avoid the retail graveyard by selling its nameplate and related assets. The plan includes entering into a stalking horse purchase agreement for its intellectual property and other intangible assets.

 

This development follows on the heels of Express Inc.'s Chapter 11 filing last month. It raises questions about the future of the retail industry and the impact of online shopping on traditional brick-and-mortar stores.

 

As we bid farewell to Rue21, one can’t help but wonder: What does this mean for the future of fast-fashion retailers? Will more follow suit in the face of growing online competition? Share your thoughts below.

 

 

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Image: Jonathan Weiss | Dreamstime.com

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