Seven years into its latest revival attempt, teen fashion retailer Rue21 declares bankruptcy. The company attributes the decision to the rise of online shopping, stiff industry competition, inflation, and broader economic challenges. Over the last two decades, this mall-based retailer has found it difficult to recapture the popularity it enjoyed in the late 1990s.
Rue21 first went bankrupt in 2002 and then again in 2017. As part of this third bankruptcy filing, all of Rue21’s 540 remaining stores and e-commerce operations will be closed within the next four to six weeks. The retailer’s website only displays a message stating it is being updated without providing additional details.
Key Takeaways
- Chapter 11 Bankruptcy Declaration: Rue21, a teen fashion retailer, has filed for Chapter 11 bankruptcy for the third time due to challenges like online shopping dominance, industry competition, inflation, and broader economic issues. This move marks the closure of all 543 U.S. stores within the next two months.
- Strategic Reorganization: Rue21 aims to liquidate its inventory and sell its intellectual property, following a similar path to previous retailers like Toys ‘R’ Us and Bed Bath & Beyond. Despite previous restructuring efforts, including closing 400 stores during its 2017 bankruptcy, the company couldn’t overcome increasing competition from multi-brand retailers and digital-first fashion platforms.
- Financial and Operational Realities: With around $194.4 million in debt and approximately 4,900 employees, Rue21 faces significant financial challenges. Despite attempts to sell the business, the company found more value in closing stores and liquidating assets. Financial consulting firm Gordon Brothers has been engaged to manage the closing sales.
- Impact on Communities and Locations: The closure affects various locations across states like Delaware, Pennsylvania, New Jersey, and Virginia, including malls and outlet centers. Rue21’s closure not only impacts its employees but also leaves a void in local economies and retail landscapes, underscoring broader shifts in consumer preferences and market dynamics.
Rue21 Declares Bankruptcy: Plans to Close All 543 US Stores
Rue21 has declared Chapter 11 bankruptcy and is closing more than 500 of its stores. The teen fashion retailer intends to shut down all 543 of its U.S. locations within the next two months, during which it will conduct extensive going-out-of-business sales and plans to sell its intellectual property. It hopes to reinvent the brand similarly to how other bankrupt retailers, such as Toys ‘R’ Us and Bed Bath & Beyond, have in the past.
Rue21 has not issued a press release nor made any public statements regarding the bankruptcy. Currently, the company’s website is offline.
Rue21, which is based in Warrendale, Pennsylvania, has filed for bankruptcy before. The company, which was originally founded in 1970 as Pennsylvania Fashions Inc., has operated under different brand names. In 2002, it filed for bankruptcy, but emerged from it in 2003 after being rebranded as Rue21. It filed for bankruptcy again in 2017.
During the 2017 bankruptcy, Rue21 closed 400 stores and reduced its debt by approximately $700 million. According to Reuters, Rue21 currently employs about 4,900 people and has around $194.4 million in debt.
Despite Rue21’s efforts to adapt after its 2017 bankruptcy by introducing a new loyalty program and overhauling its leadership team with a new CEO and CIO from GNC in 2023, more was needed to counter the growing competition from multi-brand retailers like Target and Walmart. These companies have stepped up their fashion game alongside the rise of digital-first, budget-friendly fashion sites like Shein, which have become incredibly popular with Rue21’s primary audience of teenagers.
Rue21 attempted to sell its business but could not find a buyer willing to offer more than the revenue it could generate by liquidating its inventory and closing stores. The company has engaged financial consulting firm Gordon Brothers to assist with the sales of its closing stores.
The teenage apparel retailer anticipates finishing its “going out of business sales” across all stores within the next four to six weeks.
List of Notable Rue21 Locations Closing
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In Delaware, notable rue21 locations include:
- Dover Mall at 1365 N. Dupont Highway in Dover,
- Tanger Outlet at 36496 Seaside Outlet Drive in Rehoboth Beach,
- Concord Mall at 4737 Concord Pike in Brandywine Hundred.
- Another store in Eastern Shore, Maryland, is at the Tanger Outlet, 12741 Ocean Gateway, Ocean City.
In Philadelphia:
- Philadelphia Mills store is located at 1259 Franklin Mills Circle.
- South Jersey area at the Moorestown Mall at 400 Route 38, Moorestown,
- Cumberland Mall at 849 S. Delsea Drive, Vineland.
Additionally, rue21 has announced the closure of several stores in Virginia. These include locations at:
- 8300 Sudley Road in Manassas,
- 2700 Potomac Mills Circle in Woodbridge,
- 630 Spotsylvania Mall in Fredericksburg,
- 1850 Apple Blossom Drive in Winchester, 1925 E.
- Market Street in Harrisonburg,
About Rue21
Rue21, a specialty retailer based in the U.S., offers casual clothing and accessories targeted primarily at men and women. Originally founded in 1970 as Pennsylvania Fashions, the company operates from its headquarters in Warrendale, Pennsylvania. Rue21’s products are aimed at those who aspire to the youthful spirit of being 21, catering specifically to individuals aged 11 to 17, as well as adults. Known for its affordable and trendy offerings, rue21 markets products from various brands, including Rue21, etc!, ruebeaute!, Carbon Elements, rueGuy, rue+ PLUS SIZE, and ruebleu. The company also maintains an e-commerce platform at rue21.com.
Rue21 ensures its stores are constantly updated with the latest fashion trends through daily deliveries, encouraging regular customer visits. The company provides a selection of its own brands, such as rue21 etc, Carbon, Tarea, and rueKicks, focusing on both apparel and footwear. Although rue21 was established in 1976, it was previously known as Pennsylvania Fashions.
Know more about the recent notable bankruptcies
Conclusion
Despite efforts to adapt, Rue21’s recent bankruptcy filing marks a significant setback for the once-popular teen fashion retailer. The closure of all 543 U.S. stores, combined with the shutdown of its e-commerce operations, signals the end of an era for Rue21, which has struggled to regain its former prominence in the face of stiff competition and changing consumer preferences.
With its website offline and no public statements regarding the bankruptcy, Rue21’s future remains uncertain. As the company undergoes liquidation and conducts going-out-of-business sales, it serves as a cautionary tale of the challenges facing brick-and-mortar retailers in today’s digital age.
