Forever 21 Files For Bankruptcy, U.S. Stores Expected To Close

A mall staple is in danger of ceasing operations. Forever 21 has filed for bankruptcy for the second time in six years, marking a shift in fast-fashion consumers. According to CNBC, the retailer blamed fast-fashion websites such as Shein and Temu for having “materially and negatively impacted” the company. With the new filing, Forever 21 is expected to close its more than 350 locations across the United States.

The brand has been seeking a buyer for months, making contact with 200 bidders. However, no deals were reached. Still, the floor is open for a buyer to take over the Forever 21 inventory and continue retail sales at stores nationwide.

“Certain non-U.S. online retailers that compete with the Debtors, such as Temu and Shein, have taken advantage of this exemption and, therefore, have been able to pass significant savings onto consumers,” detailed Stephen Coulombe, the operating company’s co-chief restructuring officer. “Consequently, retailers that must pay duties and tariffs to purchase product for their stores and warehouses in the United States, such as the Company, have been undercut.”

While the U.S. locations are in danger, Forever 21’s international stores and website are expected to operate as normal. Additionally, the brand name and other intellectual property owned by brand management firm Authentic Brands Group are not up for sale. The operating company is currently $1.58 billion in debt due to various loans, and more than $100 million in debt to dozens of clothing manufacturers, primarily located in Asia.

“We are receiving lots of interest from strong brand operators and digital experts who share our vision and are ready to take the brand to the next level,” Jarrod Weber, global president of lifestyle at Authentic Brands Group, said in a statement.

Forever 21 was founded in 1984 by husband and wife Do Won and Jin Sook Chang. According to The New York Times, its name derived from Mr. Chang’s opinion that 21 is “the most enviable age.” According to its website, Forever 21 is currently located in more than 540 locations globally and online.