RUE21 customers are disappointed with the chain’s closing sales as it prepares to close 540 U.S. stores, a store manager said.
The retailer, which had more than 1,200 storefronts before the pandemic, will close its 50-year operation in the coming weeks.
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But the pandemic is not solely to blame for Rue21’s financial problems, although it has helped to worsen the situation.
The chain has faced financial difficulties in recent years, making this the third time the once-popular shopping center has filed for bankruptcy in its existence, with a bankruptcy in 2017 that the company hoped would turn Rue21 around, and one before that in 2003.
The network also has debts of around $200 million, with interim CEO Michele Pascoe saying Rue21 has been “negatively impacted by challenges arising from the Covid-19 pandemic and related adverse market trends”.
She said this includes “a shift in consumer purchasing patterns from traditional retailers to online retailers and changes in consumer preferences.”
Pascoe attributes this latest filing to “underperforming retail locations, increased competition in the sector and rise in online shopping, inflation and macroeconomic headwinds, and challenges raising capital.”
But perhaps the biggest obstacle Rue21 has faced in recent years, according to Neil Saunders, managing director and retail analyst at GlobalData Retail, has been the brand’s “increasing irrelevance to teenage consumers.”
“Rue21 doesn’t have a very attractive proposition and is losing customers to other retailers and to cheaper, more interesting fashion platforms like Shein,” said Saunders. CNN.
Due to the closures, stores across the country are now offering sales on up to half off everything in stores.
But even 50% off all clothing may not be enough to drive customers to the store.
Chynna Morris, a registered behavioral technician in New York, says she and her friends used to shop at Rue21 in high school, but now she believes kids these days just aren’t interested in brands like Rue.
“I think fashion is taking over kids now,” Morris told The US Sun.
“Now, if it doesn’t have a brand, then it’s not cool.”
“You are automatically classified as poor,” she said of the brand.
“You don’t want to be the kid who asks, ‘What is that?!'”
UNEXPECTED ANNOUNCEMENT
The announcement of the store’s closure came out of the blue, according to Morgan Marinia, store manager at Rue21 in New York for over 3 years.
Marinia told local ABC affiliate WTEN-TV that workers are now left to fend for themselves as they have no information about when their site will close.
“They kept telling us we were going to be low on inventory and things like that because we were going in a different direction,” he said.
“They kept trying to assure us that our jobs were safe and that we weren’t going anywhere until last week.”
But this has now all been ruled out, with Marinia stating that no severance package is being offered to surprised employees.
Instead, he says, the company is offering extra cash to employees who stay until the end through Gordon Brothers, a liquidation company hired to oversee the closing.
But on top of all that, Marinia says his and his co-workers’ pay was late this week.
“Some of my associates still say it is pending. It doesn’t say it’s in your bank accounts.
“When we go to other stores, fill it out, they reimburse us. Many of us received our refund checks and they bounced.”
Marinia is also answering questions from the public, including shoppers looking to get deep discounts on remaining items.
“A lot of people call every day saying, “Oh, what’s your promotion? What is it?’
“Right now, people are disappointed that our sale isn’t bigger. Our sale right now is only 50% at most. It’s not really a final sale. We’re really trying to prolong it.”
The US Sun reached out to Rue21 for comment on Marínia’s concerns.
How does bankruptcy work?
Bankruptcy is a specific legal process that helps businesses eliminate debts they cannot pay.
The process allows businesses to start from scratch and gain access to new credit.
Overseen by federal courts, bankruptcies allow a company to more easily sell its assets to pay creditors, according to Investopedia.
Chapter 11, a common process for businesses, is used to restructure a business with the goal of staying open — even if it means selling most of the company’s properties.
Chapter 7, on the other hand, sells all of a company’s assets, putting it out of business.
Chapter 15, alternatively, allows collaboration between U.S. and foreign courts to conduct bankruptcy proceedings with “parties of interest involving more than one country,” according to the United States Courts.
This story originally appeared on The-sun.com read the full story
