Forever 21 has filed for bankruptcy for the second time in six years, citing intense competition from fast fashion giants Shein and Temu, and is now preparing to close all of its U.S. stores.
The retailer first filed for bankruptcy in 2019, closing 200 stores, before being acquired for $81 million by Simon Property Group, Brookfield Properties, and Authentic Brands Group, CNN reported.
Despite efforts to streamline operations, Forever 21 struggled to regain its footing. On Sunday, Forever 21's U.S. operating company filed for Chapter 11 bankruptcy in Delaware, marking the beginning of an "orderly wind-down" of its American operations.
The company cited rising costs, shifting consumer preferences, and fierce competition from foreign fast fashion retailers as well as large footprints in shopping malls with not enough foot traffic as key reasons for its downfall.
The retailer also pointed to the de minimis exemption -- a trade rule used by Shein and Temu which allows shipments valued at less than $800 to be imported without tariffs -- as a factor in their demise.
"Certain non-U.S. online retailers that compete with the Debtors, such as Temu and Shein, have taken advantage of this exemption and, therefore, have been able to pass significant savings onto consumers," Stephen Coulombe, Forever 21's co-chief restructuring officer, wrote in the court filing. "Consequently, retailers that must pay duties and tariffs to purchase product for their stores and warehouses in the United States, such as the Company, have been undercut."
Liquidation sales will soon begin at its remaining U.S. locations, while the brand explores potential buyers for its remaining assets.
The closure of Forever 21's U.S. stores adds to the growing trend of retail shutdowns, following over 7,300 store closures across various brands in 2024. While the company's global presence remains intact with over 540 locations, its future in the U.S. is uncertain.
Originally published on Latin Times
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