Forever 21 stores files for bankruptcy, announces plans to ‘wind down’ U.S. stores
Nothing lasts forever, even Forever 21.
The 540-outlet fashion company that catered to older teens and young women seeking the latest runway trends at affordable prices, announced late Sunday night it has filed for bankruptcy and is beginning the process to close its stores across the US.
Forever 21 voluntarily sought Chapter 11 protection in the United States Bankruptcy Court for the District of Delaware, according to the company.
Executives will continuing searching for a buyer for some or all of its business while the process of closing its stores is ongoing.
In the meantime, Forever 21 will conduct liquidation sales at its stores.
On Monday, the manager of the Forever 21 store at the Fayette Mall in Lexington, one of three Forever 21 stores in Kentucky, said they have not heard anything about a going out of business sale and are continuing on business as usual as of Monday afternoon.
The other two Forever 21 stores are at Mall of St. Matthews in Louisville and Florence Mall in Northern Kentucky. Forever 21 stores and websites in the U.S. will remain open while the company begins its wind-down process, company executives said.
Since 1984, Forever 21 has offered trendy and affordable clothing and accessories, especially for young women. It’s been a leader in what retailers call the “fast-fashion industry,”
Essentially, that means bringing the most updated fashionable trends to mainstream markets quickly.
“While we have evaluated all options to best position the company for the future, we have been unable to find a sustainable path forward, given competition from foreign fast fashion companies, which have been able to take advantage of the de minimis exemption to undercut our brand on pricing and margin, as well as rising costs, economic challenges impacting our core customers, and evolving consumer trends,” Brad Sell, the company’s chief financial officer, said in the press release.
Cheap, international clothing brands like Temu and Shein greatly attributed to Forever 21’s downfall, according to CNBC. The de minimis exemption allows products valued under $800 to be shipped into the U.S. without import duties.
President Donald Trump previously planned to remove the exemption but signed an executive order to pause the transaction in February, according to CNBC. Reuters reported the initial decision heavily backlogged U.S. Customs and Border Protection operations, including more than 1 million packages piling up at New York’s John F. Kennedy International Airport.
Forever 21 has filed a variety of “first-day” relief motions with the court to help employees and fund stores during the closing process, according to the company.
“As we move through the process, we will work diligently to minimize the impact on our employees, customers, vendors and other stakeholders,” Sell said in the press release.
This is the second time Forever 21 has filed for bankruptcy, according to NPR. The first happened in 2019, but Simon Property Group, Brookfield Property Partners and Authentic Brands Group jointly purchased the brand before it folded.
International Forever 21 stores are not impacted by the filing, according to the company.
“On behalf of the company, I’d like to express our deep appreciation for the hard work of our dedicated employees and their commitment to our customers,” Sell said.
“We are also grateful for the many years of support from our partners and our loyal customers, who have allowed us to serve as a fashion industry leader and go-to retailer for generations.”
