Forever 21 has officially filed for bankruptcy protection for the second time, triggering the closure of all its U.S. stores. This latest move, announced on March 16, 2025, marks the end of operations for the retailer, which was once considered a beacon of fast fashion.
The company, operated by F21 OpCo LLC, has already begun liquidation sales across its approximately 354 U.S. locations. According to Chief Financial Officer Brad Sell, the company has faced insurmountable challenges amid fierce competition from online retailers like Shein and Temu. These fast-fashion e-tailers are known for their low prices, which they are able to maintain largely by exploiting the de minimis tax exemption. This loophole allows Asian retailers to ship goods valued under $800 to the U.S. without incurring import duties, significantly undercutting pricing for competitors like Forever 21.
“We’ve been unable to find a sustainable path forward, especially considering the advantages these foreign fast-fashion companies exploit to undermine our pricing and margins,” Sell commented during the recent court filings, spotlighting the competitive dynamics reshaping the retail environment.
Founded by South Korean immigrants in 1984, Forever 21 became synonymous with affordable, trendy clothing. At its peak, the company employed 43,000 people and boasted sales exceeding $4 billion. The company’s rapid growth coincided with the rise of mall shopping, yet it has struggled to adapt as aisle traffic dwindled and online shopping surged.
Despite the retailer's historic significance, its transition away from mall-centric retailing has been fraught. Stephen Coulombe, the co-chief restructuring officer, revealed, “The ability for non-U.S. retailers to sell their products at drastically lower prices has severely impacted our ability to retain our traditional core customer base.” He noted this pressure has been compounded by high inflation and logistical challenges following the COVID-19 pandemic.
The 2025 bankruptcy filing follows a previous bankruptcy six years ago, where the company emerged with new ownership from Authentic Brands Group and prominent mall operators Simon Property Group and Brookfield Property Partners. This new partnership seemed promising, but efforts to revive the brand were hampered by persistent competition and unmet consumer expectations.
Liquidation sales at the affected U.S. locations are set to begin immediately. The company has indicated it is still seeking potential buyers who might purchase some or all of its assets, providing one last glimmer of hope for its enduring brand identity within the U.S. market.
Notably, stores located outside the United States are not part of this bankruptcy and will continue their operations under licensing agreements. “We are receiving lots of interest from strong brand operators ... ready to take the brand to the next level,” asserted Jarrod Weber, Global President of Lifestyle at Authentic Brands Group, emphasizing plans for possible brand redevelopment to adapt to modern retail conditions.
Jamie Salter, CEO of Authentic Brands Group, described acquiring Forever 21 as “the biggest mistake I’ve made,” reflecting the challenges of reviving such a prominent label amid significant market evolution.
The bankruptcy coincides with broader turmoil within the retail sector, which anticipates nearly 15,000 store closures this year, almost double the closures from 2024. Consumer shopping behaviors are shifting dramatically, and companies are facing tough decisions as they navigate rising costs. The bankruptcy of Forever 21 is symbolic of these trends, highlighting the difficulties ingrained within traditional retail models.
For now, Forever 21 will continue to operate its stores and website throughout the winding down process, with the expectation to honor gift cards during the first 30 days of bankruptcy. The fate of its trademark and operational rights remains uncertain, but for many, the lessons learned from this swift rise and fall will serve as cautionary tales as the retail industry continues to evolve.
