Major Clothing Retailer Files For Bankruptcy, Will Close All U.S. Stores

Fashion retailer Forever 21 has filed for bankruptcy protection for a second time.

The company plans to close all its U.S. stores amid competition from online retailers such as Amazon and Temu.

Forever 21 is set to close all stores in the U.S. after filing for bankruptcy for a second time. pic.twitter.com/SGvyC2t5Do

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“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,” Chief Financial Officer Brad Sell said in a statement, according to the Associated Press.

Forever 21 has filed for bankruptcy and will liquidate its US operations.

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From the Associated Press:

The de minimis tax exemption lets shipments headed to U.S. businesses and consumers valued at less than $800 to enter the country tax free and duty free.

Forever 21 stores in the U.S. will hold liquidation sales and the website will continue to run while operations wind down. The retailer’s locations outside of the U.S. are run by other licensees and are not included in the bankruptcy filing. International store locations and websites will continue operating as normal.

Authentic Brands Group owns the international intellectual property associated with the Forever 21 brand and may license the brand to other operators, F21OpCo said.

Jarrod Weber, Global President, Lifestyle at Authentic Brands Group, said the restructuring lets Forever 21 “accelerate the modernization of the brand’s distribution model, setting it up to compete and lead in fast fashion for decades to come. We’re building a direct creation-to-shelf model that moves faster.”

Forever 21 Closing All U.S. Stores After Filing For Bankruptcy https://t.co/mC3SDoIA50 https://t.co/mC3SDoIA50

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Forever 21 goes belly-up and will shutter all US stores, blames Temu and Shein https://t.co/4nNCiMmE6l pic.twitter.com/nkGOOry6ho

— New York Post (@nypost) March 17, 2025

Per NBC News:

The bankruptcy filing comes as challenges pile up for the retail industry. Consumer brands have been warning investors about slower growth this year, and retail sales, rising just 0.2% last month, came in weaker than expected in federal figures released Monday.

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Industrywide hiring has flatlined, and analysts expect brick-and-mortar operators to close more locations this year. Retail store closures in 2024 hit their highest level since the pandemic, with recent shutdown announcements by fabrics seller Joann, discounter Big Lots, Party City and others adding to the tally.

Founded in 1984 by Korean immigrants in California, Forever 21 quickly became a mall staple for millennials seeking designer-inspired styles, alongside fellow low-cost retailer H&M and the pricier Abercrombie & Fitch. Its sales peaked at more than $4 billion in 2015, with founders Jin Sook and Do Won “Don” Chang estimated to hold a combined net worth of $5.9 billion.

Yet as the 2010s wore on, the brand began to be eclipsed by online rivals, including ultra-cheap fast-fashion retailers like Shein and Temu that ship garments to U.S. shoppers from overseas, especially China. That embrace of e-commerce has proved challenging for Forever 21, which long relied on foot traffic at physical locations.