Rue21 Files for Third Bankruptcy and Is Officially Closing Its Doors for Good

The former retail giant’s third bankruptcy will be its final as over 500 stores are set to shutter.

rue21 sign outside store
Updated June 3, 2024
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It’s official — clothing and accessory retailer rue21 is officially going out of business after filing for bankruptcy for the third time. The store was a mainstay of teen fashion in the 2000s and 2010s, allowing young shoppers to save money on essentials for their wardrobes and growing a devoted fan base.

Those following the company’s trajectory will likely not be shocked, but previous shoppers may be curious about the fashion retailer’s fall from grace — a slippery slope that began in 2003.

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Pennsylvania Fashions Inc.

piter2121/Adobe rue 21 logo displayed

The chain was founded in 1970, originally called Pennsylvania Fashions Inc. Today, the company is synonymous with young, preppy fashions.

The company’s demographic is largely 11 to 17-year-olds, as well as adults wanting to incorporate younger styles into their wardrobe. This branding was reflected in its 2003 name change to rue21.

Family business

paulaphoto/Adobe creative team brainstorming

Nineteen years after opening, the company was purchased by Cary Klein, the founder’s son.

Klein reportedly sold the business in 2001 to join the Big Burrito Restaurant Group, later assuming the role of CEO.

The first bankruptcy and rebranding

William A. Morgan/Adobe rue 21 clothing store

The first time rue21 filed for bankruptcy was in 2002. At the time, it was still called Pennsylvania Fashions Inc.

At the time of the filing, the store operated over 247 stores. They exited bankruptcy a year later, in 2003, and rebranded to rue21.

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Plans for growth

Kalim/Adobe shopping for clothes in boutique

Despite the financial setback of the first bankruptcy, rue21 quickly bounced back and began to thrive as a leading teen fashion brand.

In fact, in 2011, the company announced plans to expand its distribution center in Weirton, West Virginia, a project that took a year to complete. The plans included adding 180,000 square feet of storage to its existing 189,000 square feet. At the time, the company had 654 stores in 44 states.

Expanding demographics

zephyr_p/Adobe trendy cotton men shirt

Rue21 has historically been associated with fashion for teen girls and young women, though they did try to broaden customer demographic horizons.

In 2013, the company launched several RueGuy stores in New York, Texas, and Ohio. As the name suggests, these stores were targeted at male shoppers, but they still had options for any consumer.

E-commerce launch

Konstantin Yuganov/Adobe online shopping concept

Rue21 was not unprepared for the shift to online retail. In 2013, they launched their e-commerce platform.

While their brick-and-mortar success was booming at the time, they made efforts to stay relevant in a retail climate that was becoming increasingly digital.

The 2017 retail apocalypse

Sangpan/Adobe an empty shopping mall

Brick-and-mortar retailers across industries suffered in 2017. Several factors contributed to what is often referred to as the “retail apocalypse,” including the ripple effects of the Great Recession, an overly saturated market, the death of mall culture, and potentially even social media’s growing popularity.

However, one of the likeliest contributors to this mass-scale shuttering of in-person retailers was the exponential popularity of e-commerce.

The second bankruptcy

amnaj/Adobe discussing the contract document

Rue21 was one of several companies that took a serious hit during the retail apocalypse — 3,500 stores were projected to close, and rue21 was right with them.

The company filed for bankruptcy again in 2017, which led to a reduced $700 million of debt. Additionally, 400 stores were shuttered throughout the country.

A quick bounce-back

jetcityimage/Adobe womens apparel retailer

Despite the financial setbacks, rue21 bounced back relatively quickly from its second bankruptcy filing and emerged later that year.

The company refocused efforts strategically, including ending its professional relationship with Trade Global, its fulfillment partner at the time, and hiring contractors to improve e-commerce operations. Rue21 also hired a new merchandising officer who focused on “female-focused brands.” A total of 420 stores closed during this bankruptcy.

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Trying to keep up with the market

jetcityimage/Adobe womens casual apparel and retailer

Rue21 continued to make concerted efforts to remain relevant and appeal to a wide demographic of shoppers.

In 2020, they took advantage of a market gap and significantly expanded their plus-size range. The company added its plus-size options to 61 additional brick-and-mortar stores, for a total of 318. They also announced plans to expand their designs and ranges.

The third bankruptcy and closing up shop

Minerva Studio/Adobe bankruptcy documents

This brings us to the present, when rue21 has filed for bankruptcy for a third and, it seems, final time.

The retailer will close the remaining 540 stores, and their website is inactive. Additionally, they plan to sell all intellectual property.

Lack of buyers and next steps

jetcityimage/Adobe rue21 mall retailer location

Despite ongoing efforts to remain relevant in several aspects, rue21 floundered even after a relatively successful comeback from the retail apocalypse. The former retail giant did make attempts to sell the business but ultimately found that it would be more profitable to shutter stores and liquidate inventory.

While the site is down, bargain shoppers will likely find going-out-of-business sales at local brick-and-mortar stores. The company has hired Gordon Brothers, a Boston-based company specializing in valuations and dispositions, to handle their bankruptcy.

Bottom line

jetcityimage/Adobe rue21 mall logo

After a more than 50-year run with several ups and downs, customers must now say goodbye permanently to rue21, a brand that was once a staple in the closets of teens across the country.

They’re not the only millennial fashion retailer and mall favorite to file for bankruptcy, though, as more shoppers choose to save money at Amazon and other e-commerce outlets instead of paying inflated mall prices. Express also filed for bankruptcy and announced several store closures in April. With former iconic brands and stores either closing or significantly scaling back operations, the future of fast fashion retail remains to be seen.

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Author Details

Lucy Clark

Lucy Clark has considerable experience writing about real estate, as well as homes and gardens, home value, and more. She is savvy and resourceful, and she aims to ensure others can be, as well.