Rue21, a teen apparel retailer, has announced closing all its 540 stores across 45 states. This decision follows the company's filing for Chapter 11 bankruptcy protection for the third time. At its zenith in 2013, rue21 boasted 1,000 stores but faced challenges leading to the closure of 400 "underperforming" locations after its 2017 bankruptcy filing. The closures mark a significant end to a brand that once operated under the motto, "fashion should be fun and accessible to all”.
The reasons behind rue21's decline are multifaceted. In court filings, interim CEO Michele Pascoe cited several factors, including the negative impacts of the COVID-19 pandemic, adverse market trends such as a shift in consumer shopping patterns from traditional brick-and-mortar retailers to online platforms, and changing consumer preferences.
Additionally, the company faced challenges due to underperforming retail locations, increased industry competition, the uptick in online shopping, inflation, macroeconomic headwinds, and difficulties in raising capital.
Despite attempts to sell the business, rue21 found that none of the bids matched the potential revenue from shutting down its stores and liquidating its inventory. This decision underscores the harsh realities facing many traditional retailers in an increasingly digital marketplace. The company expects to complete the "going out of business sales" at all of its locations within the next 4-6 weeks, although the exact start date of these sales was not specified.
Founded in 1970 as Pennsylvania Fashions Inc., rue21 was renamed after exiting bankruptcy in 2003. Despite its efforts to adapt and evolve over the years, the retailer's journey underscores the challenges brick-and-mortar stores face in adapting to the rapidly changing retail environment.
