American fast-fashion giant Forever 21 is set to permanently shut down all 350 US stores after filing for bankruptcy for the second time in six years.
The manager of the fashion brand’s operations in the US blamed foreign competition from fast-fashion chains like Shein and Temu, rising costs, economic challenges, and evolving fashion trends, for the company’s demise.
However, Forever 21 stores and the company’s US website will remain open for now, as the brand begins shutting down its operations and seeks last-minute bids for its assets. The bankruptcy filing of a brand that once was a leader in fashion for young people, especially younger women, is a symptom of a larger crisis in the retail industry.
The retail industry is facing a major crisis. Federal figures released last Monday show that retail brands have warned investors that growth is expected to be lower this year. In the US, retail sales only rose 0.2% in February.
Forever 21 is closing all 350 of its US stores after filing for bankruptcy a second time
The company blamed fast fashion, saying it was “materially and negatively impacted” by Shein and Temu
Another mall favorite falls. pic.twitter.com/BwONaEyeOH
— Morning Brew
(@MorningBrew) March 17, 2025
The crisis has also taken its toll on industrywide hiring, as it has not only flatlined but more retail stores are expected to go under this year. Retail store shutdowns hit highs not seen since the pandemic. Brands like fabric seller Joann, Big Lots, and Party City are among the most prominent retailers to close down stores this year.
The fashion retailer was founded in 1984 by Korean immigrants Do Won Chang and Jin Sook Chang in California. The brand became a staple of millennial fashion alongside H&M and Abercrombie & Fitch and saw sales peak at more than $4 billion in 2015. Founders Do Won Chang and Jin Sook are estimated to have a net worth of $5.9 billion.
Since the beginning of the decade, Forever 21 has struggled to compete with online retailers such as Amazon, Temu, and Shein, primarily due to its reliance on in-store purchases at shopping mall locations.
Sarah Foss, global head of legal at financial firm Debtwire said, “It is unlikely that a white knight will emerge to purchase all or a portion of its retail locations.” Foss added, “The final nail in the coffin for Forever 21” is because they were at a disadvantage against foreign retailers that use the “de mimis” exemption.
This US law allows goods worth less than $800 to go through customs with fewer import duties and inspections. Under both Biden and President Trump, the U.S. government attempted to take steps to fight these exemptions, but those efforts were paused in February. As a result, inexpensive goods from China can still exploit the exemption and enter the country.
