Rue21 Inc. is a US-based retailer of teen fashion. It has been forced to announce the closure of more than 400 stores nationwide. It was due to severe financial pressure and declining store foot traffic.
In the early 2000s, Rue21 was a rapidly growing teen retailer. It was with a famous brand that could compete against other tough competitors like H&M and Forever 21.
In the mid-2010s, after experiencing fast growth and taking on a significant debt load in a private equity transaction, the shop faced a retail downturn. Rue21 joined a sizable group of mall-based retailers who filed for bankruptcy in 2017. After closing more than 400 stores and giving title to its lenders, it finally returned that year.
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Are all Rue21 stores closed?
Rue21, a retailer of teen clothes, announced the closing of 400 locations nationwide in 2017. At least 14 of them are in Louisiana. The Esplanade mall in Kenner, as well as those in Marrero, Harvey, and Covington, are among several that have closed.
On April 15, 2017, the privately held company posted on Facebook about the decision to close the locations. It is described as “a challenging yet needed decision.” The retailer’s nationwide reach will be reduced to around 700 outlets due to the closures.
Rue 21, based in Pittsburgh, was the most well-known clothing retailer to announce store closures at the time. This retailer’s stores were once pillars in shopping centres across the nation. Later, they saw their profits eroded by declining mall foot traffic and fierce online competition.
This chain has stores in malls, strip malls, and outlet malls across the US that sell low-cost clothes and accessories. It also needed help paying off a debt of almost $1 billion. Most of that debt was acquired due to a forced acquisition by private equity company Apax Partners LLP in 2013 that cost $1.1 billion.
In a long line of retailers, Rue21 would be the most recent. This is done to file for bankruptcy as more people make their purchases online.
Is Rue 21 shutting down?
In 2017, Rue 21 declared bankruptcy and recovered from it. This occurred during a rush of Chapter 11 filings by mall-based businesses. Rue21 has finished its financial reorganization and exited the Chapter 11 procedure. To lower its debt and generate more financing, the company reached deals with several of its lenders in May 2017. Also, it filed a voluntary request for reorganization under Chapter 11 of the Bankruptcy Act.
Rue21 and several other clothing companies at the time and many more in the years since declared bankruptcy. It happened due to growing debt and shifting consumer preferences, specifically a gradual reduction in mall traffic. Its relatively easy and painless bankruptcy process allowed for a fast reorganization.
On September 11, 2017, the US Bankruptcy Court approved the firm’s reorganization plan for the Western District of Pennsylvania. Rue21 joined a large group of mall-based merchants who filed for bankruptcy in 2017. After shutting more than 400 outlets and giving ownership to its lenders, it finally made a comeback that year.
North of Pittsburgh, Pennsylvania, was where Rue 21 had its headquarters. Rue 21 had 644 locations in 48 states, including malls, outlets, and strip centers, in addition to its online store as of August 2022.
Is Rue21 in financial trouble?
The business stated that it intended to open 15 more stores before the end of 2020. With the start of the COVID-19 epidemic and its early, stormy months, this was the period in which the market reached a high-water mark in terms of retailer failures and store closures.
Rue21 was breaking its own goals, according to the retailer’s chief financial officer. Additionally, year-over-year sales prices are rising. Moreover, it increased availability under its asset-based facility while decreasing debt.
Since then, there have been many changes in the retail and clothing industries. After a year of rising operational and logistics expenses and growing demand, consumers have been reducing their expenditures. This is because they protect themselves from inflation on necessities. Some clothing stores have reported declining sales and earnings in the new atmosphere.
For some in the sector, the overall shift in sales volume has led to new financial risks. This is connected to the recent rising dangers in specialty retail, department stores, and clothing. Data from CreditRiskMonitor shows a considerable increase in businesses facing bankruptcy since 2020.
During the pandemic, several retailers closed their doors. However, Rue 21 opened three new locations that earned more than 50% better than expected. The business credits its data-driven site selection approach. For the success of the locations, their goal is laser-focused on their client base.
Five more locations will be opened by Rue21 before teenagers, and young people return to school, the company said in July 2021. Up until the end of the year, 15 new stores are planned. The openings are in carefully chosen locations selected by a data-driven model.
The retailer, which targets Gen Z clients between the ages of 15 and 25, became an exception during the pandemic. When it had double-digit growth in 2020, this took place. As a result, it made it possible to start investing in its physical and digital footprints.
Is Rue21 going out of business?
According to Bill Brand, CEO of Rue21, recent new shop openings have shown the relevance of their store channel to brand discovery and client acquisition. He also claimed that “our unique in-store experiences have boosted customer satisfaction.”
Additionally, the business introduced Rue Rewards, the brand loyalty program. Its main objective is to turn new in-store customers into omnichannel clients. The program’s 5.5 million active members are involved.
The business credits its data-driven site selection approach based on its customer profile. Each location must ideally match its target client demographics as part of the real estate selection process. Before accepting a new location, field teams visit every site as another way to contribute.
Rue21’s combination of data and client recognition provides the ultimate recipe for a successful location. The new stores were funded in part by the performance of the new stores in 2020. This is according to Rue21’s CFO, Michele Pascoe, who manages the company’s real estate strategy. He said, “We are eager to welcome more devoted customers to the brand as we expand the network.” In 2022, more stores were expected to be opened by the company.
Lenders and Rue21 have a basic understanding. It will take care of its cash flow issues and remain consistent with the company’s vendors and suppliers.
This business is privately owned. However, it made no mention of the agreement’s details or terms. In a statement, Rue21 CEO Bill Brand praised the bankers for their continuous support of their company. According to Bloomberg Law, lenders had proposed the retailer. This “would probably help it avoid a second bankruptcy.”
That came after an earlier Wall Street Journal report. Rue21 was said to be partnering with Ducera Partners. This is done to look at refinancing and restructuring solutions after a decline in sales.
Rue21 acknowledged in its statement that it collaborated on its deal with Ducera. Additionally, it collaborated with the law firm Akin Gump Strauss Hauer & Feld and the financial advising firm Alvarez & Marsal. The Brand also referred to the current market’s difficulties with sales.
Rue 21 is open to the difficulties presented by the challenging retail climate, as has been well reported. According to Brand, historical inflation has had a vast and early impact on their clients. The company believes that Rue 21 plays a significant role in the retail world, and once this arrangement is completed, it will have the funds to do so.