Forever 21 is going out of business in the United States

American stores will likely liquidate but stores in Canada and elsewhere are unaffected.

Editor’s note: F21 OpCo, LLC, operator of Forever 21 stores and licensee of the Forever 21 brand in the United States, said in a press release Sunday that stores outside of the United States are operated by other licensees and are not included in the Chapter 11 filings. Forever 21’s Canadian locations aren’t affected because Toronto-based fashion house YM Inc. is the brand’s operating partner in Canada.

NEW YORK/LONDON — Forever 21 isn’t even cool enough to exist anymore.

The retailer’s U.S. operating company filed for bankruptcy Sunday — for the second time in six years — in a court in Delaware, citing fierce competition from foreign fast fashion retailers. It marks the end of an era for a clothing brand that introduced many teens to fast fashion.

The company said in a statement that its stores and website in the United States will remain open and continue serving customers for now, but it is implementing an “orderly wind-down” of its business in the country. It added that it would conduct liquidation sales at its stores and that it was seeking a buyer for some or all of its assets.

Brad Sell, the company’s chief financial officer, said in the statement: “We have been unable to find a sustainable path forward, given competition from foreign fast fashion companies… as well as rising costs, economic challenges impacting our core customers and evolving consumer trends.”

Many U.S. businesses file for bankruptcy protection to wind down some operations, shed debt and cut costs. Chapter 11 bankruptcy is a common route, allowing ailing companies to solve their financial problems by restructuring.

Forever 21 has been unable to keep up with Chinese e-commerce giants such as Shein and Temu, especially as online shopping boomed during the pandemic. The company is also sensitive to U.S. President Donald Trump’s tariff hikes on Chinese imports into the United States.

All three retailers are fast fashion brands, meaning they mass-produce cheap clothes that are often quickly discarded as consumers strive to keep up with the latest trends. The business model has also been criticized for its negative impact on the environment.

“Forever 21 has not helped itself through these challenges: merchandising and the assortment have been lackluster, and the brand has lacked any clear point of view for a long time,” said Neil Saunders, a retail analyst at GlobalData Retail, in a comment. “The net result is that more and more customers, especially those at the younger end of the market, have abandoned it.”

Forever 21 first filed for Chapter 11 bankruptcy in 2019 and subsequently shut down 200 stores. A few months later, a team consisting of mall operators Simon Property Group and Brookfield Properties and brand management firm Authentic Brands Group bought Forever 21 for US$81 million. That allowed the retailer to keep operating with a smaller retail footprint.

But years later, the outlook remained bleak.

Forever 21 joins a long list of companies closing stores in the U.S. Last year, major U.S. retailers announced more than 7,300 store closures, up 57 per cent from 2023, according to Coresight Research. These included Walgreens (WBA) and CVS (CVS).

Forever 21 currently has more than “540 locations globally and online,” according to its website. At the time of its first bankruptcy filing, it had 800 locations worldwide.

The Forever 21 brand might live on through licensing agreements, but that would make the retailer a “a shadow of its former self, but a sale is possible as e-commerce and brand groups may show some interest,” Saunders added.

Article written by Ramishah Maruf and Anna Cooban, CNN