Rue21, a mall staple, filed for bankruptcy and will close all of its stores

Rue21, a mall staple, filed for bankruptcy and will close all of its stores

Rue21, a mall staple for teen clothing, will go out of business and close all 540 of its stores in the coming weeks.

The Pittsburgh-based company filed for bankruptcy Thursday for the third time in its existence, marking the end of nearly 50 years in business for the retailer, which had 1,200 locations at its peak just a few years ago.

The retailer, which has about $200 million in debt and 4,900 employees, has struggled financially in recent years despite a 2017 bankruptcy that the company hoped would revive Rue21. It also filed for bankruptcy in 2003.

In a court filing, interim CEO Michele Pascoe said that Rue21 was “negatively impacted by challenges stemming from the Covid-19 pandemic and related adverse market trends, including a shift in consumer shopping patterns from traditional retailers to online retailers and changing consumer choice.”

Pascoe said that Rue21’s bankruptcy was due to “underperforming retail locations, increased industry competition and an increase in online shopping, inflation and macroeconomic headwinds, as well as challenges to raise capital.”

The main problem that led to Rue21’s downfall was the “increasing irrelevance of the brand to teenage consumers,” according to Neil Saunders, managing director and retail analyst at GlobalData Retail.

“Rue21 doesn’t have a very attractive proposition and is losing customers to other retailers and to cheaper and more attractive fashion platforms like Shein,” he told CNN. “There is still a big question mark as to whether the retail market needs Rue21 to exist.”

Rue21 did not immediately respond to CNN’s request for comment, and its website is no longer functional.

Its stores, located in 45 US states, will close over the next 4 to 6 weeks and “going out of business” sales will begin soon. The company will also sell its brand name and other intellectual property.

Rue21 is the latest retailer to experience financial turmoil. Express filed for bankruptcy last month and announced it would close about 100 stores. 99 Cents Only Stores, a discount chain, also said in April it would go out of business.

Joann, the fabric retailer, filed for bankruptcy in March and exited the process this week, declaring that it was on its “strongest financial footing in years.”

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