Forever 21 has filed for Chapter 11 bankruptcy for the second time in six years, unable to find a buyer for its 350 U.S. stores. The once-thriving retailer, known for trendy and affordable clothing, has struggled with dwindling foot traffic and fierce competition from online giants like Shein and Amazon.
Brad Sell, the company’s CFO, highlighted the challenges they face from fast fashion brands that can offer lower prices due to tax exemptions on imports worth less than $800. This issue has made it tough for Forever 21 to compete effectively.
Founded in 1984 in Los Angeles by South Korean immigrants, Forever 21 expanded rapidly, peaking at around 800 stores by 2016. However, the company has been in decline since its first bankruptcy in 2019, which resulted in closing over 150 stores. The brand’s latest downturn comes amid a shift in consumer shopping habits, especially among younger buyers who prefer online shopping.
Historically, retail chains like Forever 21 have grappled with changes in shopping behavior. According to a recent survey by the National Retail Federation, 70% of consumers now prefer online shopping over in-store experiences, a statistic that reflects a long-term trend benefiting e-commerce over traditional mall-based retail.
Social media is buzzing as shoppers react to the bankruptcy news. Many expressed nostalgia for the brand but acknowledged the unfortunate reality of changing fashion landscapes. “It’s sad to see a store we grew up with go under, but honestly, it’s not surprising given how things have changed,” said one user on Twitter.
As Forever 21 prepares for liquidation sales, it may close at least 200 stores. Its parent company, Catalyst Brands, formed through a merger that includes JC Penney, plans to sell some assets to stay afloat.
Despite its challenges, Forever 21’s brand isn’t completely lost. Authentic Brands Group, the owner of the company’s trademarks, could turn the struggling retailer into an online-only brand or revitalize it in a new form. Jamie Salter, CEO of Authentic Brands, previously noted that acquiring Forever 21 was a mistake, but the brand’s legacy may not end here.
For more details on Forever 21’s situation, you can read more on Fox Business.
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