Forever 21 Files for Bankruptcy Again, Plans to Shut Down U.S. Stores
Forever 21 has filed for bankruptcy protection for the second time in six years. The fast-fashion retailer plans to liquidate its U.S. operations while keeping its stores and website open during the process. Rising costs, increased competition from online retailers, and declining mall traffic have led to its financial struggles.
A Struggling Brand in a Changing Market
Forever 21 was once a leader in affordable fashion, competing with brands like H&M and Zara. However, shifting consumer habits, economic challenges, and growing competition from foreign fast-fashion retailers, including Shein and Temu, have hurt its ability to maintain market share. The retailer blames the de minimis exemption, which allows low-cost imports under $800 to bypass tariffs, for making competition more difficult.
The company first filed for bankruptcy in 2019 but was later purchased by a group of investors, including Authentic Brands Group and Simon Property Group. Despite attempts to revive the brand, Forever 21 continued to struggle as e-commerce took over the retail industry and mall foot traffic declined.
Bankruptcy Details and Liquidation Plans
Forever 21’s U.S. operator, F21 OpCo, filed for bankruptcy in Delaware. The company listed its assets between $100 million and $500 million, while liabilities range from $1 billion to $10 billion.
The company plans liquidation sales at around 350 U.S. stores, but the business may still be sold to a new owner. If a successful sale occurs, it may avoid a complete shutdown. However, without a buyer, Forever 21’s U.S. presence will end.
Forever 21’s international stores will remain open, as they are operated by license-holders not affected by the bankruptcy.
The Rise and Fall of Forever 21
Founded in Los Angeles in 1984 by South Korean immigrants Jin Sook and Do Won “Don” Chang, Forever 21 quickly grew into a major fashion retailer. By 2016, it had 800 stores worldwide, with 500 in the U.S.
The brand built its reputation on trendy, affordable clothing, attracting young shoppers. However, its reliance on brick-and-mortar stores became a disadvantage as online shopping gained popularity. Despite previous restructuring efforts, Forever 21 could not recover from declining sales and increasing financial pressure.
What’s Next?
Authentic Brands Group still owns the Forever 21 trademark and intellectual property, meaning the brand name could continue in some form. However, the company’s CEO has publicly admitted that purchasing the brand was a mistake.
If no buyer steps forward, Forever 21’s U.S. retail presence may end. Consumers may still find its products through international stores or potential licensing deals. For now, U.S. shoppers can expect liquidation sales at remaining locations.
More…
- https://www.reuters.com/markets/deals/fast-fashion-retailer-forever-21-files-bankruptcy-2025-03-17
- https://www.nbcnews.com/news/us-news/forever-21-set-shut-us-operations-files-bankruptcy-rcna196678
- https://abcnews.go.com/Business/wireStory/mall-staple-forever-21-files-bankruptcy-protection-119867597Â
