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Bankruptcy, But Make It Fashion: What Happened to Forever 21
From Mall Rat to Midlife Crisis – Is it the End for Forever 21? All millennial 30 & 40-somethings want to know!
Forever 21, the American fast-fashion retailer, filed for Chapter 11 bankruptcy protection for the second time on March 17, 2025. This move comes amid mounting financial challenges and an increasingly competitive retail landscape. Because it has filed under Chapter 11, which is a reorganizing chapter of the Bankruptcy Code, the brand still has a fighting chance!
The company cited several factors contributing to its financial distress:
- Intense Competition: Online fast-fashion retailers like Shein and Temu have captured significant market share, offering trendy clothing at lower prices and with faster turnaround times.
- Changing Consumer Preferences: Shoppers are increasingly favoring online shopping experiences over traditional brick-and-mortar stores, leading to decreased foot traffic in malls where many Forever 21 stores are located.
- Economic Pressures: Rising operational costs, including rent and wages, coupled with inflationary pressures, have strained the company’s financial resources.
Forever 21 announced plans to close all 350 of its U.S. stores by mid-2025, unless a buyer emerges to take over some or all of its operations. The company has initiated liquidation sales across its U.S. locations to sell off inventory. Interesting enough, stores outside the United States are not affected by the bankruptcy and continue to operate under separate licensing agreements. Forever 21’s parent company, Authentic Brands Group, is exploring options to keep the brand alive through licensing agreements and potential online ventures. However, the future of the brand in the U.S. market remains uncertain.
