As American malls face a retail apocalypse, one of the biggest names in fast fashion just threw in the towel. Forever 21 has filed for bankruptcy for a second time in six years, blaming Chinese competitors and shifting consumer habits for its downfall. One by one, we are losing classic American stores.
At a glance:
- Forever 21 files for Chapter 11 bankruptcy for the second time in six years
- The retailer plans to liquidate its approximately 350 U.S. stores while seeking a buyer
- Foreign competitors like Shein and Temu have undercut Forever 21 on pricing
- The company estimates assets between $100-500 million and liabilities between $1-5 billion
- Stores and website will remain open during liquidation process
Another American Retailer Falls to Foreign Competition
Forever 21, once a shopping mall staple for trendy young Americans, has filed for bankruptcy protection for the second time since 2019 – and it’s preparing to close its stores. The fast-fashion retailer cited competition from foreign companies and declining mall traffic as major factors in its decision.
The company, founded by South Korean immigrants in Los Angeles in 1984, has been unable to compete with online giants like Shein and Temu. These Chinese retailers have leveraged tax advantages to offer similar products at rock-bottom prices.
“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,” Forever 21’s Chief Financial Officer Brad Sell said.
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The bankruptcy filing reveals the dire financial situation at Forever 21, with liabilities estimated between $1 billion and $5 billion. Assets are valued significantly lower, between $100 million and $500 million, according to court documents.
During its peak in 2016, Forever 21 operated approximately 800 stores globally, with 500 locations across the United States. After its first bankruptcy in 2019, the company closed over 150 stores in an attempt to restructure.
“Forever 21 was always a retailer living on borrowed time. Over recent years it has been hit with dual headwinds from a weak apparel market and stiff competition from cheap Chinese marketplaces,” explained Neil Saunders, a retail analyst at GlobalData.
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Forever 21 plans to conduct liquidation sales at its stores while simultaneously pursuing a court-supervised sale process for its assets. If a buyer emerges, the company might avoid a complete shutdown and transition to new ownership. But given its dire financial situation, that seems unlikely at this stage.
The company’s intellectual property and trademark remain owned by Authentic Brands Group, which acquired these assets after Forever 21’s first bankruptcy. This arrangement means the Forever 21 brand could potentially continue in some form, even if its current U.S. operations cease.
The fall of Forever 21 represents more than just another retail bankruptcy; it symbolizes the broader challenges facing American businesses competing against foreign companies operating with different rules. While the company’s stores and website remain operational during the bankruptcy process, the future looks uncertain for what was once a cornerstone of American mall culture.
We are entering a whole new era of American brands and business – and some of these old names are on their way out.
