US fashion retailer Forever 21 has filed for bankruptcy for the second time in six years, blaming mounting online competition from fast fashion retailers and weak footfall.
The retailer also blamed its current financial predicament on higher costs and foreign companies, such as Shein, taking advantage of America’s ‘de minimis’ duty-free treatment of low-cost packages as undermining its pricing power, according to The Guardian.
“We’ve been unable to find a sustainable path forward, given competition from foreign fast-fashion companies, which have been able to take advantage of the de minimis exemption to undercut our brand on pricing and margin,” said Brad Sell, finance chief at F21 OpCo, which operates Forever 21’s roughly 350 US stores.
Founded in 1984, Forever 21 was popular with young shoppers and reached its peak in 2016, when it operated some 800 stores globally, with over 500 in the US.
But like many fashion brands worldwide, it struggled to deal with the rise of ecommerce players and the death of the shopping centre.
In the US, retail has been struck hard by bankruptcies, with over 20 brands filing for insolvency since the start of 2024.
Forever 21 is planning a liquidation sale of its US stores, while it goes through a court-supervised sale and marketing process for remaining assets – which it estimated to be worth between $100m (£77m) and $500m (£385.1m).
By comparison, it has liabilities of between $1bn and $10bn, according to its filing with the bankruptcy court in the district of Delaware.
Its US stores and website will remain open during the process, and its international stores will remain unaffected.
The brand last collapsed into insolvency in 2019 and was bought out by Sparc Group – a joint venture between Authentic Brands Group and shopping centre operators Simon Property and Brookfield Asset Management.
It is currently owned by Catalyst Brands, which was formed in January between Sparc and department store chain JC Penney.
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