Rue 21 closing all stores in Chapter 11 bankruptcy

It’s been a difficult past few years for retailers who base most of their operations out of indoor shopping malls.

The most recent example of this ongoing problem is at Rue 21, a store that sells mostly teen and tween clothing. Rue 21 sells affordable apparel and accessories, from party dresses to graphic tees, but has struggled to regain the enthusiasm it enjoyed during the early 2000s.

On May 2, Rue 21, a majority of which is owned by Blue Torch Capital, filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware. It listed $100 million-$500 million in assets and liabilities in its petition. Blue Torch Capital owns approximately 78% of the troubled retailer.

Amid the filing, Rue 21 will also close all of its stores. It currently operates about 540 of them across the United States. Its website is also no longer functional, with a message on the home page that reads, “Our site is being updated. Check back soon.”

Its stores are slotted to close in the next four to six weeks.

This marks the third time Rue 21 has filed for bankruptcy. It filed in 2002 for Chapter 11 under its old name, Pennsylvania Fashions. It reorganized and attempted to expand, exiting Chapter 11 in 2003 and renaming itself Rue 21.

Large crowds at a busy shopping mall.

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Then again in 2017, Rue 21 announced it would close 400 stores and file once again for Chapter 11. It re-emerged in September 2017 and announced in 2020 that it would pivot more of its focus to plus sized and size inclusive offerings.

More Retail:

It’s been a tough several years for retailers that operate primarily out of malls or shopping centers that rely heavily on spillover foot traffic.

Think about the last time you made a trip to the mall. If you’re like many Americans, chances are that trip was quite a long time ago, and you aren’t planning another trip for quite some time.

It’s been tough at malls

A lot of indoor malls have closed entirely due to a decline in foot traffic, and though the conventional belief is that they’re closing due to Covid or Amazon, the reality is that people just don’t like shopping the way they used to.

Consumers would rather go where things are cheaper. And everything from clothes to pet supplies are usually a bargain off-mall retailers like TJ Maxx, outlet malls, big box stores, and yes, even online.

Once-popular mall stores used to be packed during the weekends, like Express, Forever 21, Macy’s (M) , and Gap (GPS) are now relics of the past. Many have shuttered hundreds of stores, filed for bankruptcy, or sought rebrands and new ownership.