UPDATE: September 12, 2019: Forever 21 has plans to file for bankruptcy, potentially as soon as Sunday, The Wall Street Journal reported Wednesday citing anonymous sources. However, the retailer told the newspaper, as well as USA Today and other media, that it was not planning to file on Sunday, describing the report as "inaccurate" and saying it planned to continue operating the "vast majority" of its stores.

News and analysis service Debtwire reported earlier in September that Forever 21 was working with claims agent Prime Clerk in preparation of a bankruptcy and was in talks with lenders about debtor-in-possession financing.

Dive Brief:

• Forever 21 is preparing for a possible Chapter 11 filing, according to a Bloomberg report that cited anonymous sources. CNBC also reported that Forever 21 was weighing bankruptcy. The company did not immediately reply to Retail Dive's request for comment.
• According to Bloomberg, the fast-fashion retailer is running out of cash while talks with lenders have "so far stalled." Talks around debt restructuring have shifted toward bankruptcy financing to take the company through Chapter 11.
• A filing would "help the company shed unprofitable stores and recapitalize the business," Bloomberg reported. Forever 21 reportedly hired restructuring advisers in June and has been mulling its options, including bankruptcy, over that time.

Dive Insight:

It's been a tough year for fashion retailers. Charming Charlie filed its second bankruptcy inside of two years with plans to liquidate its store operations and put its brand property for sale, while Charlotte Russe also opted to liquidate in Chapter 11. Plenty of others are in distress or grappling with falling sales.

Many of those retailers have common problems: falling mall traffic, heavy discounting in apparel, off-price and other discounters encroaching on their market share, shifts to e-commerce, heavy debt loads, changing habits in the apparel space and shifts in consumer spending patterns from products to experiences. 

As its finances deteriorated, Forever 21 this year shut down its Chinese e-commerce site, months after also closing stores in Taiwan and France. It also sold its headquarters this year for about $166 million, according to the Los Angeles Business Journal.

That followed some years of acquisitions and expansion, including reportedly investing in Los Angeles-based apparel subscription service DailyLook last year, launching beauty brand and store banner Riley Rose, and in 2014 launching its super-cheap "F21 Red" banner.

Forever 21, founded in 1984 and with more than 800 stores, has been trying to bolster its financial position in such a way that its founding family would retain control, according to Bloomberg.