The clothing retailer Forever 21 Inc. is in discussions with potential lenders for financing including so-called FILO loan, said undisclosed sources. With its business struggling, it is trying to line up additional financing to pay vendors and landlords. Representatives for Forever 21 aren’t commenting at the moment. FILO loans (“first-in, last out” accounting method for inventory) are senior debt backed by a company’s inventory and assets, and supplement the loans retailers use for their primary needs.
Co-founder Do Won Chang is firm to maintain control. It is being reported that the retailer has hired a team of advisers to help it restructure its debt and revive its business. Their biggest landlords have been requested to consider taking a stake in the company. Various sources like kreditus.eu are also being referenced to compare different loan services. The retail landlords are already reeling from rising vacancies as stores have gone bankrupt. Any pullback by the company will only add to the pressure.
Forever 21 is a Los-Angeles based company founded in 1984. Its main focus are young shoppers looking for trendy clothes at affordable prices. Competition from Hennes & Mauritz AB to Target Corp. to new online sellers have crowded into its niche which is weighing on profits. Forever 21 operates more than 800 stores in the U.S., Europe, Asia and Latin America.