Forever 21 files for bankruptcy in the US

Forever 21's U.S. operating company filed for bankruptcy last week for the second time in six years and said it would wind down its domestic operations, hurt by mounting online competition in the fast-fashion sector and weak mall traffic.

It blamed the situation on higher costs and companies taking advantage of duty-free treatment of low-cost packages from China to undermine its pricing power.

Highly competitive environment

"Brick-and-mortar retailers like Forever 21 operate in a highly competitive environment where the cost of doing business is expensive and rising with inflation rates," said Sarah Foss, head of legal and restructuring at Debtwire, which provides data and analytics on leveraged loans.

The retail sector saw 20 bankruptcy filings since the start of 2024, while 25 retail chains have had at least two bankruptcy filings since 2016, according to Debtwire data.

Forever 21 is conducting store closing sales at all of its U.S. locations, and it will honor customer gift cards during the first 30 days of its bankruptcy.

Trademark and intellectual property

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

Source: www.reuters.com/markets/deals/fast-fashion-retailer-forever-21-files-bankruptcy-2025-03-17/