Forever 21, the iconic fast-fashion brand, has filed for bankruptcy for the second time in just six years, signaling a shift in the fashion retail landscape. The company has blamed the growing competition from fast-fashion giants like Shein and Temu for its financial struggles. According to CNBC, the rise of these online platforms has significantly impacted Forever 21’s ability to compete in the marketplace.
Forever 21 was founded in 1984 by Do Won and Jin Sook Chang. The name reflects Mr. Chang’s belief that 21 is “the most enviable age.” The company operates in more than 540 locations globally, both physical and online stores.
Forever 21 plans to close over 350 stores across the United States as part of the bankruptcy proceedings. Despite efforts to find a buyer, including discussions with more than 200 potential bidders, no agreement has been reached yet. However, the company remains open to a buyer taking over its inventory and continuing operations in its U.S. locations.
“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,” explained Stephen Coulombe, co-chief restructuring officer of the company. “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.”
Moreover, although the future of Forever 21’s U.S. stores is uncertain, its international stores and website will continue to operate as usual. The company’s intellectual property and brand assets, which are under the management of Authentic Brands Group, are not part of the bankruptcy proceedings and are not up for sale. The operating company is currently burdened with $1.58 billion in debt, which includes loans and more than $100 million owed to various clothing manufacturers, primarily based 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,” said Jarrod Weber, global president of lifestyle at Authentic Brands Group, in a statement.