Forever 21 to shut down all US stores after filing for bankruptcy

Fast fashion retailer Forever 21 is set to close all stores in the US, with the company filing for bankruptcy for a second time. This comes as online ultra-fast fashion retailers like Shein and Temu have eclipsed the US brick-and-mortar retailer in recent years.

On Sunday, the operator of Forever 21’s US unit said that overseas competition, economic challenges, changing consumer trends, and rising costs were to blame, per NBC News.

In the meantime, stores and Forever 21’s US website will remain open as the company begins winding down operations. It is seeking a last-minute bidder for assets, however, Sarah Foss, global head of legal at the financial firm Debtwire, said that "it is unlikely that a white knight will emerge to purchase all or a portion of its retail locations."

Foss said that the "final nail in the coffin" for the company was foreign brands’ usage of the "de minimus" exemption, which allows goods worth less than $800 to come into the US with fewer import inspections and duties, at a disadvantage to Forever 21. Both the Biden and Trump administrations have taken steps to close the loophole, but the Trump White House paused its changes to the exemption.

Forever 21 was founded in 1984 by Korean immigrants in California, and by 2015 its sales peaked at more than $4 billion, with founders Jin Sook and Do Won "Don" Chang estimated to hold a combined net worth of $5.9 billion. Throughout the 2010s though, brands like Shein and Temu that shipped products to customers eclipsed the retailer that relied on foot traffic to physical locations.

It filed for bankruptcy for the first time in 2019 with hopes of becoming more efficient, but the pandemic accelerated issues at the company despite being bought out by Authentic Brands. The CEO of Authentic Brands in 2024 said that the purchase of Forever 21 was "probably the biggest mistake I made."

In the latest bankruptcy filing, the company listed assets of between $100 million and $500 million and liabilities of $1 billion to $10 billion. It comes as the retail industry is facing slower growth and weaker-than-expected retail sales, as well as slow hiring in the industry.