Forever 21 has filed for a second bankruptcy, citing increased competition from fast fashion retailers such as Shein and Temu.
Unless the fast-fashion brand secures a buyer, Forever 21 will close all 354 US stores by 1 May and has begun the process of winding down.
Brad Sell, CFO of Forever 21, said: “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 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.”
Forever 21 struggled with competition amid the rise of international low-cost online retailers, including fast fashion giants Shein and Temu, who benefit from the de minimis exemption. The de minimis policy allows goods under $800 to enter duty-free.
Shein and Temu’s business models rely on delivering low-cost orders directly to customers, maintaining their competitive edge through affordable fashion, and increasing pressure on brick-and-mortar retailers.
Additionally, the company cited rising costs, economic challenges impacting its core customers, and shifting consumer trends as key factors in its bankruptcy.
The company plans to begin liquidation sales at its outlets and plans to sell some or all of its assets. Back in February 2024, Forever 21 shut down 236 stores and closed 34 stores.
Forever 21 had previously filed for Chapter 11 bankruptcy in 2019 before being acquired for $81 million by Simon Property Group, Brookfield Properties, and Authentic Brands Group.
However, the fashion retailer struggled to stay afloat, losing $400 million in the last three years and is expected to lose $180 million in EBITDA in 2025.
Other Forever 21 stores outside the US will continue operations and are not part of the bankruptcy filings.
Founded in 1984, fast fashion brand Forever 21 grew to 500 stores in the US before downsizing due to a challenging retail market.
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