Rue 21, Teen Mall Staple, Closing 540 Stores

Teen apparel and accessories retailer Rue 21 has filed for bankruptcy protection and plans to close all of its remaining stores.

The longtime mall fixture will close its 540 outlets in the next four to six weeks and sell its intellectual property, the company said in its filing at U.S. Bankruptcy Court in Delaware.

Rue 21, based in Warrendale, PA, cited in its filing “underperforming retail locations, the continued growth of online shopping and industry competition, inflation and macroeconomic headwinds, and difficulties raising capital in an amount sufficient to meet liquidity needs and [to] fund operations.”

This is the third bankruptcy filing for Rue 21, which previously filed for protection in 2003 and 2017—with the 2017 process resulting in the chain closing 400 stores.

In this month’s filing, Rue 21 disclosed that it attempted to sell the business but could not find a buyer willing to pay more than what the company is expecting to yield from store closing sales and liquidating the assets.

Rue 21 is the second mall-based fashion chain to file for bankruptcy protection in as many weeks.

Two weeks ago, Express disclosed in an SEC filing that it is closing more than 100 stores and expects the balance of its fashion retail portfolio to be acquired by a consortium led by WHP Global.

In the filing, Express said it has received a non-binding letter of intent from the consortium, which includes Simon Property Group and Brookfield Properties, “for the potential sale of a substantial majority of the company’s retail stores and operation.”

Express said in the filing it is closing 95 of its Express stores and all 12 of its UpWest stores. Express operates 530 Express retail and Express Factory Outlet stores in the U.S. and Puerto Rico.

Express, which also operates outlets under the Bonobos brand, said it has a commitment from its lenders for $35 million in financing that will allow the company to keep its remaining stores open for business.

This is not the first time the mall REITs Simon and Brookfield have participated in the rescue of a retailer on the verge of going under. In 2016, Simon and Brookfield teamed up with WHP’s largest competitor, Authentic Brands, to save the apparel chain Aeropostale, Bloomberg reported.

Four months after fast-fashion retailer Forever 21 filed for Chapter 11 bankruptcy in the fall of 2019, a consortium of Authentic Brands, Simon and Brookfield bought the retailer’s assets for $81 million. In 2020, Simon and Brookfield teamed up to acquire J.C. Penney’s retail business.

Express reported a net operating loss of $28.7 million in Q3 2023. In March, the company was delisted from the New York Stock Exchange for failing to maintain a market capitalization of at least $15 million for 30 consecutive trading days.