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Forever 21 Files for Chapter 11 Bankruptcy, Will Close All U.S. Stores

by Taylor Williams

LOS ANGELES — Forever 21 has filed for Chapter 11 bankruptcy and will begin the process of closing all its U.S. stores. According to Reuters, the U.S. store count is about 350.

The Los Angeles-based apparel retailer filed over the weekend in the U.S. Bankruptcy Court for the District of Delaware. Forever 21 has entered into a plan support agreement with its lenders to begin the voluntary closure process while continuing to look for sales opportunities of existing U.S. assets.

Forever 21 was founded in 1984 and had a footprint of more than 800 stores worldwide at the height of its operation. The company also filed for Chapter 11 bankruptcy protection in 2019, which led to the company closing 350 stores across the United States and other countries. International stores are not impacted by the 2025 filing.

As a relative staple within American mall tenancy, Forever 21 faced new challenges in its post-2019 bankruptcy filing stemming from the COVID-19 pandemic and elevated competition from e-commerce brands and platforms. According to CNBC, the company has been hit especially hard by competition from Chinese platforms Shein and Temu.

The company’s ownership structure underwent a series of changes between 2021 and 2023, and earlier this year, numerous news outlets reported that Forever 21 was again looking for ways to circumvent a second Chapter 11 filing. Subsequent reports on closing of certain U.S. stores and laying off of staffers at the headquarters office would follow.

“While we have evaluated all options to best position the company for the future, we have been unable to find a sustainable path forward, given the 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, as well as rising costs, economic challenges impacting our core customers and evolving consumer trends,” says CFO Brad Sell. (The de minimis exemption allows duty-free entry into the country for shipments of imported goods valued at $800 or less)

Authentic Brands Group, which in 2020 joined Simon Property Group in purchasing a 37.5 percent stake in the company, will continue to own the intellectual property associated with the Forever 21 brand and may license the brand to other operators. American stores, as well as relevant websites will remain open and operational as the winding-down process plays out.

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