Forever 21, once a leader in youth fashion retail, is set to permanently close all its U.S. stores as it files for bankruptcy for a second time.
The operator of the brand’s U.S. unit said Sunday that foreign competition from fast-fashion rivals, rising costs, economic challenges and evolving consumer trends were to blame. For the time being, stores and the company’s U.S. website will remain open as Forever 21 starts winding down operations and seeks a last-minute bidder for its assets.
The bankruptcy filing comes as challenges pile up for the retail industry. Consumer brands have been , and in federal figures released Monday.
and analysts expect brick-and-mortar operators to close more locations this year. Retail store closures in 2024, with recent shutdown announcements by , , and others adding to the tally.
Founded in 1984 by Korean immigrants in California, Forever 21 quickly became a mall staple for millennials seeking designer-inspired styles, alongside fellow low-cost retailer H&M and the pricier Abercrombie & Fitch. Its sales peaked at more than $4 billion in 2015, with founders Jin Sook and Do Won “Don” Chang estimated to hold a combined net worth of $5.9 billion.
Yet as the 2010s wore on, the brand began to be eclipsed by online rivals, including ultra-cheap fast-fashion retailers like Shein and Temu that ship garments to U.S. shoppers from overseas, especially China. That embrace of e-commerce has proved challenging for Forever 21, which long relied on foot traffic at physical locations.
“It is unlikely that a white knight will emerge to purchase all or a portion of its retail locations,” Sarah Foss, global head of legal at the financial firm Debtwire, said in a statement Monday. She added that “the final nail in the coffin” for Forever 21 was its disadvantage against foreign brands that make use of the “de minimis” exemption, a U.S. rule allowing goods worth less than $800 to sail through customs with few import duties and inspections.
The Biden and then Trump administrations have each . But the White House , allowing cheap Chinese imports to continue entering the country as usual despite from industry groups and .
Forever 21 in 2019, hoping to become a more efficient operation. But the Covid-19 pandemic only accelerated the company’s woes, even as it was bought out of bankruptcy by Authentic Brands, the operator of other major retailers and two major mall operators.
the CEO of Authentic called the purchase of Forever 21 “probably the biggest mistake I made.”
Ultimately, today’s youth demographic simply moved on from the Forever 21 brand, experts said.
“Forever 21 was the brand that the former generation used,” said Roger Beahm, a marketing professor and director of the Retail Learning Labs at Wake Forest University, . “Today’s shoppers want their own brand, they want their own identity.”
In its latest bankruptcy filing, Forever 21 listed assets of between $100 million and $500 million and liabilities of $1 billion to $10 billion.
