Final curtain falls on fast-fashion retailer Forever 21

Fast-fashion retailer Forever 21’s US operating company filed for chapter 11 bankruptcy for the second time in six years, hamstrung by dwindling mall traffic and mounting competition from online retailers.

The move on Sunday means liquidation for the company, named F21 OpCo, which was unable to find a buyer for its roughly 350 US stores. Forever 21’s trademark and intellectual property — held by an entity called Authentic Brands Group — may live on in a different form.

The rise of e-commerce players such as Amazon, Shein and Temu, along with the slow death of the American mega mall, has hurt apparel retailers such as Forever 21 and Bonobos-parent Express, which filed for bankruptcy in 2024.

Founded in Los Angeles in 1984 by South Korean immigrants, Forever 21 at its height was popular among young shoppers on the prowl for stylish but affordable clothing. By 2016 it was operating about 800 stores globally, with 500 of those in the US.

“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,” said Brad Sell, F21 OpCo’s CFO.

De minimis refers to the US waiver of standard customs procedures and tariffs on imported items worth less than $800 that are shipped to individuals.

Forever 21 previously filed for chapter 11 in 2019 and was bought out of it by Sparc, a joint venture between label owner Authentic Brands Group and mall operators Simon Property and Brookfield Asset Management.

Now, Forever 21 plans liquidation sales at its stores while it goes through a court-supervised sale and marketing process for some or all of its assets.

Its stores and website in the US will remain open and continue serving customers, and that its international stores remain unaffected.

The company listed its estimated assets in the range of $100 million to $500m, according to a filing with bankruptcy court in the District of Delaware, and liabilities in the range of $1bn to $10bn. The filing showed creditors in the range of 10,000 to 25,000.

In the event of a successful sale, Forever 21 may pivot away from a full wind down of operations to facilitate a going-concern transaction.

Forever 21 is owned by Catalyst Brands, an entity formed on January 8 through the merger of Forever 21’s previous owner, Sparc Group, and JC Penney, a department store chain owned since 2020 by mall operators and Simon Property Group.

When Catalyst Brands was formed, it said in a statement that it was “exploring strategic options” for Forever 21.

Authentic Brands will continue to own Forever 21’s trademark and intellectual property, which could live on in some form. Authentic Brands CEO Jamie Salter last year called acquiring Forever 21 “the biggest mistake I made”.

Reuters