OFF THE RACK
Popular bankrupt mall retailer closing all stores in single state – as CEO blames ‘uptick in online shopping’
Shoppers can take advantage of sales at the store for a limited time
A PROMINENT mall retailer that filed for bankruptcy earlier this month is shutting down all its stores in a single state.
The brand called out e-commerce for its struggles in the industry as its store closings continue to sweep the nation.
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It's the third time since style and fashion chain Rue21 has filed for bankruptcy since 2003.
Rue21 submitted its Chapter 11 court filing on May 2, which provided further details about its financial struggles.
The brand has around $200 million in debt and retains about 4,900 employees.
Interim CEO Michele Pascoe explained in the filing that the company encountered challenges over the past few years initiated by the coronavirus pandemic.
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The shopping landscape changed, and according to Pascoe, Rue21 found much of its customer base opting for online shopping instead.
She described the brand's primary demographic as "adolescents and young adults" with an approximate average household income of around $50,000.
The CEO said its "core customers are focused on making value-priced purchases" more than anything.
That focus was seemingly threatened by an "uptick and online shopping."
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Pascoe attributed the company's downfall in the filing to "adverse market trends, including a shift from traditional brick-and-mortar retailers to online retailers and changing consumer preferences."
Liquidation sales have begun at Rue21 locations across the country and will reportedly continue throughout the next six weeks.
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Those sales have already started happening in Washington, which will see all of its Rue21 stores closed for good — starting with South Hill Mall in Puyallup, about 10 miles southeast of Tacoma.
WAVING GOODBYE
Joe Bell, a spokesperson for the mall, confirmed that they were already looking to lease out the space left behind by Rue21 to another retailer.
He called Rue21's situation "unfortunate," saying the mall had seen the brand struggle for several years while speaking with The News Tribune.
"It's unfortunate but that company has been having a rough time for the past few years," Bell said.
"Our leasing executives are already engaging with other business owners who might be eager to set up shop at the mall."
How does bankruptcy work?
Bankruptcy is a specific legal process that helps companies eliminate debt they can't repay.
The process allows businesses to start fresh and gain access to new credit.
Supervised by federal courts, bankruptcies allow a company to sell off its assets more easily to pay off creditors, according to Investopedia.
Chapter 11, a common process for companies, is used to restructure a business with the goal of remaining open - even if it means selling off most of the company's properties.
Chapter 7, on the other hand, sells all of a company's assets, putting it out of business.
Along with Washington, Rue21 is set up to close all its locations across every state where it operates soon.
The exact dates of each closure remain unclear.
Rue21 has about 541 stores throughout 45 states, per its website.
Read More on The US Sun
For more related content, check out The U.S. Sun's coverage of the 11 key stores shutting down for good after the bankruptcy announcement of clothing retailer Express.
The U.S. Sun also has the story of the big-box retailer closing a store location and "holding nothing back" during 30% off liquidation sales.