201604.06
0

Pacific Sunwear (PacSun): Fashion Retailer to File Bankruptcy?

Fast Fashion and Bankruptcy

Fashion Financial Crisis Bankruptcy Depression Finance Concept -PacSun - Pacific Sunwear

Earlier today Bloomberg and other news outlets reported that Orange County based fashion retailer, Pacific Sunwear (PacSun) is set to file Bankruptcy.  Although this is sure to make news in the consumer world, rumors have been swirling for some time in the fashion industry regarding PacSun’s potential bankruptcy filing.  It was not a question of whether PacSun was filing for bankruptcy but rather when they were filing for bankruptcy.

Another Retailer Set to File Bankruptcy?

PacSun’s filing is the latest in a line of clothing retailers falling behind in the fast fashion world.  They are now possibly filing for Bankruptcy.  Over the last few years other once prominent retailers such as Wet Seal, American Apparel and Quicksilver filed for bankruptcy protection.  PacSun currently has 611 stores. Their stock prices closed today at $0.08 a share after opening at $0.35.

Over the last few years, with the exit of a number of their buyers, PacSun and other retailers that filed bankruptcy couldn’t keep up with the quick changing trends and low prices that retailers such as H&M and Forever 21.  Additionally, new retailers such as Zara are becoming more and more popular.

Reason for Bankruptcy

The retailers that are surviving in this fashion environment are the ones that can change their entire clothing lineup as fast as the trends change.  Fashion in today’s economic environment is similar to stories in social media, it’s all about what’s new and trending.  Due to social media, clothing trends get spread like wildfire but also get outdated fast.  The past model was to update stores as the seasons change.  Retailers prepared a year in advance for each season.  By that time, the trend is long gone.  Today, the business model is about offering a steady stream of new trends throughout each season.  Businesses need to quickly change or update the lineups as the trends change.  This allows teens, students and anyone who likes fashion to consistently update their closet and more importantly, their style.