Forever 21, the once-dominant fast-fashion retailer, is preparing to file for bankruptcy for the second time, with plans to close at least 200 stores across the U.S., according to Bloomberg. The company, struggling to compete with online giants like Shein and Temu, is seeking financial restructuring and a potential buyer to keep its brand alive.
At its peak, Forever 21 operated more than 800 stores worldwide, making it a major player in the fashion industry. However, shifting consumer habits and fierce competition from digital retailers have significantly impacted its brick-and-mortar business.
If no buyer emerges during the restructuring, the retailer may be forced to liquidate all 350 of its remaining stores, a move that could have widespread consequences for shopping malls and retail workers across the country.
A spokesperson for Forever 21 confirmed to USA Today that the company is “exploring strategic options, including a potential sale, while also reducing costs and optimizing its store footprint. The efforts are ongoing, and no final decisions have been made regarding the outcome of the process or the number of stores that may be closed.”
Forever 21 isn’t the only major retailer facing financial struggles. Other brands, including JCPenney, Kohl’s, and Party City, have also announced store closures due to declining mall traffic and increasing economic pressures. JCPenney, which filed for bankruptcy in 2020, continues to scale back operations, while Kohl’s is shutting down underperforming locations. Party City has also been downsizing after its bankruptcy filing in 2023.
Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, told Newsweek: “Forever 21 is the latest clothing retailer to find itself in economic no man’s land, mostly due to now more affordable online stores taking over their clientele and being not as strong of a competitor in the slightly more expensive mid-range clothier tier. The result is a potentially massive restructuring that hopes to eliminate lower-performing stores and refocus the company’s brand, but whether it will work remains to be seen.”
The company’s U.S. operator, F21 OpCo, has been working with restructuring advisers to address its financial challenges. According to Bloomberg, some stores slated for closure have been unprofitable for years, with the company reportedly withholding royalties and rent payments at certain locations to stay afloat.
Forever 21 is currently managed under Catalyst Brands, the parent organization that also oversees JCPenney, Aéropostale, Brooks Brothers, and Lucky Brand. Despite the uncertainty surrounding its U.S. operations, Authentic Brands Group, which owns Forever 21’s intellectual property, has stated it will continue licensing the brand to other retailers and distributors worldwide.
While reports confirm that at least 200 locations will close, an official list of affected stores has not yet been released. However, local news reports in states like California, Connecticut, and Washington indicate that some closures are already underway.
Forever 21’s bankruptcy proceedings could begin as early as next month, Reuters reported. If a qualified buyer steps in, the retailer may be able to restructure and continue operating in a reduced capacity. However, if no buyer emerges, full liquidation could spell the end of Forever 21 as a physical retail presence.
As the retail landscape continues to evolve, Forever 21’s future remains uncertain. Will its brand manage to survive in some form, or is this the final chapter for the once-iconic fashion chain?
