The teen retailer announced today that it would be closing 400 of it’s stored across the U.S. The company’s fleet currently includes roughly 1,200 stores in 48 states. According to WWD, a spokeswoman said the company is currently speaking with lenders, noting that the Rue21’s financial state is “unfavorable.”
“As part of our ongoing business transformation into a more cost-efficient operator, we are closing unprofitable stores across our fleet in order to focus on our many hundreds of highly profitable locations,” the spokeswoman said.
Two weeks ago the company went into forbearance at the risk of defaulting on loans.
“We continue to work with our lenders and bondholders to find the best solution to the company’s need for more capital and for a business model with less debt, in order to ensure that we move forward as a stronger and more sustainable enterprise,” she continued.
As teens and adults turn to online shopping in droves, it’s not hard to see why so many retailers are now on the chopping block. While it’s sad to see so many of our childhood retailers put out of business, it’s even more disheartening at how many jobs will be lost in the process.
In an interview with Business Insider, Mark Cohen, director of retail studies at Columbia Business School, commented on the “retail apocalypse.”
“This is creating a slow-rolling crisis," he said. "The people that work in retail stores will lose their jobs, then spend less money in retail stores because they are no longer employed. That creates a cascade of economic challenges."