Forever 21 will close all of its locations in the U.S. after filing for bankruptcy on Sunday, marking the second bankruptcy filing by the clothing brand in the last six years as the company cited stiff competition from online fast fashion retailers like Shein and Temu.
The company said it struggled against other fast fashion retailers like Shein and Temu as it ... [+]
Forever 21 filed for Chapter 11 bankruptcy in Delaware, the company announced in a statement Sunday, noting it would implement an “orderly wind-down” of its U.S.-based operations.
Forever 21’s website will continue to operate while the company holds liquidation sales at its stores, and Authentic Brands Group—which owns the international intellectual property associated with Forever 21—may license the brand to other operators as Forever 21 seeks a buyer for some or all of its assets, the company said.
Brad Sell, Forever 21’s chief financial officer, said the company has been “unable to find a sustainable path forward” amid competition with “foreign fast fashion companies” that benefit from de minimis, a trade provision used by low-cost retailers like Temu and Shein to avoid paying duties or certain taxes on packages.
The company also struggled with rising costs, “economic challenges” impacting Forever 21’s customers and “evolving consumer trends,” Sell said.
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- That’s how many stores Forever 21 has in the U.S., according to Reuters.
Neil Saunders, a managing director and retail analyst at GlobalData, said last week there was likely no “pathway for [Forever 21] to get back to the significant status it once had.” He added the company has been “battered by the rise of Shein and to a certain extent Temu,” with competition added from Zara, Uniqlo and others as Forever 21 sells “generic ‘stuff’ that many shoppers are happy to pass on, or which they can find much cheaper online.”
This is a developing story.