Rue21, a well-known teen apparel store, is shutting down. The company will close all 540 of its stores soon. Based in Pittsburgh, Rue21 filed for bankruptcy this Thursday, marking its third filing and signaling an end to its nearly 50-year legacy. At its peak, Rue21 boasted 1,200 locations.
The company is struggling with $200 million in debt and has around 4,900 employees. Despite a previous bankruptcy in 2017 meant to revitalize the business, financial woes persisted. Rue21 also experienced bankruptcy in 2003.
Interim CEO Michele Pascoe highlighted the impacts of the COVID-19 pandemic and shifts in shopping habits in a court filing. Pascoe attributed the bankruptcy to "under-performing retail locations, increased industry competition and the uptick in online shopping, inflation and macroeconomic headwinds, and challenges raising capital."
According to Neil Saunders, managing director at GlobalData Retail, Rue21's brand has become increasingly irrelevant to teenagers. "Rue21 does not have a very compelling proposition and is losing customers to other retailers and to cheaper and more interesting fashion platforms like Shein," Saunders explained to CNN. He questioned the necessity of Rue21's existence in the current retail market.
Currently, Rue21 has not commented on the closure, and its website is down. The stores are spread across 45 US states and will be closing within the next 4 to 6 weeks. The company plans to start 'going out of business' sales shortly and will also sell its brand name and other intellectual property.
The retail sector continues to face difficulties, with Rue21 being the latest casualty. Express and 99 Cents Only Stores have also recently declared bankruptcy, signaling a broader trend of challenges within the industry.
Joann, a fabric retailer, declared bankruptcy in March but has emerged this week, claiming to have built its "strongest financial foundation in many years."
