Teen apparel chain rue21 is shutting down, leaving malls across the nation dotted with soon-to-be empty storefronts. The Warrendale, Pennsylvania-based retailer succumbed to financial woes as it filed for Chapter 11 bankruptcy on Thursday, planning to liquidate its inventory and close all 543 of its stores, as WATE reported. The move marks rue21's third bankruptcy, signaling a distressing trend for physical retail outlets in an increasingly digitized shopping age.
The company, which employs roughly 5,000 workers nationwide, is expected to conduct extensive "going out of business" sales within the next couple of months rue21's history of restructuring dates back to its first Chapter 11 filing in 2003, followed by another in 2017 when it shut down about 400 stores, information from Reuters reveals, and now this third collapse illustrates the relentless challenges brick-and-mortar retailers face against the surge of online shopping and changing consumer habits.
Rue21 reportedly failed to find a buyer who considered the company's value higher than what could be recouped from liquidation sales, as per KTIV. This, combined with the heavy debt load of over $194 million and the ongoing impact of the COVID-19 pandemic, has driven the company to close its doors for good, leaving employees and customers to grapple with the abrupt end of a once-popular retail destination.
Despite efforts to stay afloat rue21's attempt last year to raise additional capital merely resulted in a $25 million investment from existing lenders who now own 80% of the company's stock, a strategy falling short as long-term liquidity could not be sustained, KTIV's coverage states. The brand and other intellectual properties will be sold separately from the store closures, with rue21 seeking assistance from Gordon Brothers for the sales process.
Closures are imminent with the company's website currently signaling its fate, displaying a maintenance message that forebodes the end of the teen retailer's online presence as well. Amidst reports of no prior warning to employees regarding the shutdowns, rue21's collapse has sparked a wave of dismay on social media platforms, with workers and consumers lamenting the loss of a familiar name in young adult fashion to the unforgiving currents of the commercial landscape.
