Forever 21 seeks rent concessions as fast-fashion brand faces financial woes

Forever 21 is asking landlords for a break on rent as the legacy fast-fashion player's sales decline and it struggles to keep up with savvier competitors, CNBC has learned.

The retailer, which has more than 380 stores in the U.S., has asked some landlords to cut its rent by as much as 50%, people familiar with the matter told CNBC. 

While the company is facing financial difficulties, it has yet to hire advisors and isn't considering a second bankruptcy protection filing, the people said. It's working to restructure its many leases so it can cut costs, they said. 

Forever 21 faces a range of issues that have long plagued its business. It operates in the increasingly saturated fast-fashion market, the people said. They also added that the retailer struggles to manage inventory and understand and respond to its consumers.

The retailer's struggles come after it filed for bankruptcy protection in 2019 and was later bought by a consortium including brand management company Authentic Brands Group and landlords Simon Property Group and Brookfield Property Partners.

When the company sought bankruptcy protection, it had more than 800 locations globally.

Similar to many retailers, Forever 21's massive store footprint weighed on its balance sheet when it first filed for bankruptcy protection. The retailer had expanded too quickly during its growth phase, leaving it unable to invest in its supply chain and rapidly respond to changing trends. 

Closing hundreds of stores after filing for bankruptcy protection has not resolved its issues.

Forever 21's financial position has also hurt the performance of its operator Sparc Group — the joint venture that includes Authentic, Simon and as of last summer, Chinese-linked fast-fashion behemoth Shein.