This is the end of an era: Forever 21’s U.S. arm just filed for bankruptcy again, marking the second time in six years. The company says it’s going to wind down its domestic operations, blaming tough competition from online retailers and the decline of mall traffic.
Brad Sell, the company’s finance chief, pointed to higher costs and foreign fast-fashion brands using the U.S.’s duty-free rule on cheap packages from China to undercut its prices. “We’ve had a hard time competing with brands like Shein and Temu,” he said.
The “de minimis” exemption lets packages worth under $800 come into the U.S. without tariffs, which helps companies like Shein and Temu keep their prices super low. In February, President Trump paused a plan to scrap this rule after it caused chaos with customs and delivery services.
Forever 21 entered bankruptcy with $1.58 billion in debt after losing over $400 million in the last three years. It lost $150 million in 2024 alone and is expected to lose around $180 million in 2025, according to court filings.
Founded in 1984 by South Korean immigrants in L.A., Forever 21 became a go-to for affordable, trendy clothes. At its peak, it had 43,000 employees, 800 stores worldwide, and over $4 billion in annual sales.
But with the rise of online shopping and fewer people hitting the malls, brands like Forever 21 have struggled. It joins other retailers like Bonobos-parent Express, which filed for bankruptcy last year. “Stores like Forever 21 are dealing with rising costs and heavy competition,” said Sarah Foss, a restructuring expert.
So far in 2024, there have been 20 retail bankruptcies, and 25 chains have filed more than once since 2016, according to Debtwire.
Forever 21 is now holding closing sales at all of its U.S. stores, and customers can still use gift cards for the next 30 days. The company is looking for buyers for its U.S. business, but its international stores are safe for now.
The brand filed for bankruptcy back in 2019 and was bought out by Sparc Group, a joint venture between Authentic Brands Group and mall owners Simon Property and Brookfield. After a brief rebound, Forever 21 made $2 billion in 2021, but losses started to pile up again.
In 2023, Shein bought a stake in Sparc Group, hoping to boost Forever 21’s sales by selling items on Shein’s site. But that didn’t work, according to court documents.
Now owned by Catalyst Brands, a merger between Sparc and JC Penney, Forever 21 is still exploring options. Authentic Brands owns the Forever 21 name and trademark, so it might live on in some form. CEO Jamie Salter even called buying the brand “the biggest mistake I made.”
