Forever 21 files for bankruptcy a 2nd time, plans to close all U.S. stores

Longtime fast-fashion retailer Forever 21 filed for bankruptcy Sunday — its second such filing in six years — and plans to shutter all its U.S. locations as operations wind down.

Executives of F21 OpCo, which operates Forever 21 stores and holds the licensee for the brand in the U.S., said the company filed for Chapter 11 bankruptcy due to foreign competition.

“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, as well as rising costs, economic challenges impacting our core customers, and evolving consumer trends,” Chief Financial Officer Brad Sell said in a statement Sunday.

The company, which was founded nearly 41 years ago, has $1.58 billion in debt after losing more than $400 million over the last three years, $150 million of which was lost last year alone, according to a Reuters report.

Forever 21 filed for Chapter 11 for the first time in 2019 but was bought out of bankruptcy by Authentic Brands Group and its partners. In a 2024 interview with Retail Dive, Authentic CEO Jamie Salter said acquiring Forever 21 in 2020 is “probably the biggest mistake I made.”

There are 540 Forever 21 locations globally, according to the brand’s website. Of those stores, 354 are located in the U.S., Reuters reports, including locations in Long Beach, Lakewood and Cerritos.

International locations are operated by other licensees and are not included in the bankruptcy filing, according to the F21 OpCo announcement. International stores and ecommerce will continue operations.

Authentic continues to own the intellectual property associated with Forever 21 and can license it to other operators, the announcement stated.

Forever 21 locations are large and often anchor the retail centers in which they are located. The average size of stores is 38,000 square feet, with its largest store measuring in at 162,000 square feet, according to multiple reports. These large spaces could prove difficult to backfill at malls and other retail centers that have been struggling to compete with online shopping for years.

“Experts have long predicted the demise of shopping centers, but the COVID-19 pandemic may have put the final nail in the coffin,” Jamie Johnson, senior analyst for Business.com, wrote last year.

“Some retailers have bounced back, but it isn’t hard to see that the traditional shopping model isn’t what it was during the heyday of shopping malls in the 1980s, ’90s and early 2000s,” Johnson continued. “Even more ominous, according to Capital One Shopping Research, up to 87 percent of large shopping malls are predicted to close over the next decade.”

The ease of online shopping, the prevalence of social media and costs associated with brick-and-mortar stores are all fueling the decline, Johnson notes.

Forever 21 is just the latest in a string of big-box retailers going belly-up. Big Lots, Party City, Joann and Macy’s are all in their final days of liquidation, Fox Business reports. And this is just a continuation of a trend seen for years, with other longtime retailers like Bed, Bath & Beyond, Pier 1 Imports.

Other retailers may not be going out of business, but they have moved to close a significant number of stores. Foot Locker, Bath & Body Works, Gap, Banana Republic, Target, Walmart, CVS, Walgreens and Rite Aid all have announced store closures.

"On behalf of the Company, I'd like to express our deep appreciation for the hard work of our dedicated employees and their commitment to our customers,” F21 OpCo’s Brad Sell said. “We are also grateful for the many years of support from our partners and our loyal customers, who have allowed us to serve as a fashion industry leader and go-to retailer for generations."