Forever 21, considered a leader in the youth fashion retail industry a decade ago, is set to permanently close all US stores as a second file due to bankruptcy.
Operators of the US unit of Forever 21 said on Sunday that foreign competition will be held accountable from first fashion rivals, rising costs, economic challenges and evolving consumer trends. For the time being, the company and its US website will remain open as the company begins to shrink its business and seeks last-minute bidders for its assets.
Bankruptcy filings are a growing number of challenges in the retail industry. Consumer brands have warned investors about slower growth this year, with retail sales, which rose just 0.2% last month, expected to be weaker than expected in federal figures released Monday.
Industry-wide employment is flatlined, and analysts hope that brick and mortar operators will close more locations this year. Retail closures have reached the highest level since the 2024 pandemic. Recent fabric sellers Joanne, Discounter Big Lot and Party City have been closed in addition to tally.
Founded in 1984 by Korean immigrants in California, Forever 21 had annual revenue of $1 billion by 2005. The store has become a staple for millennial malls looking for designer-inspired styles, becoming low-cost retailers H&M and Pricier Abercrombie & Fitch. Forever 21 sales peaked at over $4 billion in 10 years, with founders Jin Sook and Do Do “Don” Chang being estimated to hold a net worth total of $5.9 billion.
But as the 2010s progressed, the brand began to be devoured by online rivals, including ultra-stable first-fashion retailers like Shein who shipped clothing from overseas to US customers. In this environment, as customers are increasingly leaning towards e-commerce, Malls’ reliance on footing has begun to prove liability.
“It is unlikely that White Knight will emerge to buy all or part of the retailer,” Sara Foss, the global head of debt at the financial company, said in a statement Monday. She added that “co’s final nail” in Forever 21 is a disadvantage against foreign brands that take advantage of the “de minimis” exemption. This is a US rule that allows customs with less import obligations and inspections to navigate goods under $800.
Biden and the Trump administration have each taken steps to curb the loophole. However, the White House made changes before last month, allowing cheap Chinese imports to continue entering the country as usual despite continuing pushbacks from industry groups and other tariff batteries.
Forever 21 filed for bankruptcy for the first time in 2019, hoping to operate more efficiently. However, the Covid-19 pandemic has only accelerated the company’s misery, even if it was purchased from bankruptcy by a genuine brand, operator of other major retailers.
In a 2024 interview, the CEO of Authentic called The Purchase of Forever 21 “probably the biggest mistake I made.
Ultimately, today’s youth demographics simply shifted from the Forever 21 brand, experts said.
“Forever 21 was a brand used by previous generations,” Roger Beahm, professor and director of the retail learning lab at Wake Forest University, told the Los Angeles Times. “Shoppers today want their brand. They want their own identity.”
In its latest bankruptcy filing, Forever 21 listed assets of $100 million to $500 million and liabilities of $1 billion to $10 billion.
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