Forever 21 shuts down SA stores

Fast-fashion US retail brand Forever 21 has shut down its stores in South Africa, cutting dozens of jobs and creating more headaches for JSE-listed property groups Liberty Two Degrees (L2D), Hyprop and Attacq.

Forever 21, which filed for Chapter 11 bankruptcy in the US last September and has had to close more than 350 stores around the world, had just three outlets in South Africa. However, they were in three of the country’s most prominent shopping centres: Nelson Mandela Square at Sandton City, Canal Walk in Cape Town and Mall of Africa in Waterfall City.

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Hyprop and L2D confirmed the closure of Forever 21 stores to Moneyweb on Wednesday, but declined to reveal the operator of the stores in the country. A Dubai-based licence holder is behind the South African Forever 21 operation, which opened its first store in 2015.

L2D, which manages and partly owns Nelson Mandela Square, said in a statement that the Forever 21 store at the centre closed at the end of July. The store at Hyprop’s Canal Walk super-regional shopping centre closed at the end of March – the week South Africa went into the initial Covid-19 lockdown.

Attacq, which owns Mall of Africa together with private property group Atterbury, is yet to respond to Moneyweb queries. However, the store at the centre is closed, with mall posters covering the doors and windows.

While L2D and Hyprop played down the closures, they could not have come at a worse time. Retail landlords are coming under increased pressure due to the impact of Covid-19 on retail trade and rental collections. Consequently, the property sector is facing increased vacancies.

Recently Massmart closed its DionWired chain, which had stores at Sandton City, Mall of Africa and Canal Walk, among several other shopping centres countrywide. Embattled Edcon, which was downsizing its retail space even before Covid-19 hit, had already cut its floor space at Mall of Africa and Canal Walk. However, this space has since been filled.

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Forever 21 had its flagship 2 000m² store at Nelson Mandela Square. The store at Canal Walk took up 1 300m², while the Mall of Africa store was of a similar size.

“L2D’s exposure to Forever 21 is limited to one store, which represents 0.3% of total portfolio GLA [gross lettable area] and 0.4% of total portfolio gross rental. The store has been operational since 2015 and has been operated by a licence-holder of the brand that had the rights for the South African jurisdiction,” L2D noted in its response to Moneyweb.

“Sandton City and Nelson Mandela Square are home to a wide range of leading South African and global brands. Management is currently focused on carefully considered measures that will continue to be implemented to fill tenant vacancies, work together with our current tenants to build their businesses and support tenants in stepping forward together,” the group added.

L2D noted that Sandton City and Nelson Mandela Square continue to trade in line with the current Level 3 lockdown regulation.

Regarding the Canal Walk Forever 21 store, Hyprop CEO Morne Wilken stated: “The store was owned by the UAE franchisee and was managed out of Dubai … The box [vacated space] is very well positioned within the mall and we have multiple options for the space with a number of potential tenants interested. We are very positive about our repositioning plans for Canal Walk.”

Forever 21, which was established in Los Angeles in the early 1980s, has not been as successful in growing its store footprint in South Africa as other international fashion retailers such as Cotton On, H&M, Zara and LC Waikiki.