Forever 21’s U.S. operating company, F21 OpCo, has filed for Chapter 11 bankruptcy protection for the second time in six years. The filing, made on Sunday, follows the retailer’s unsuccessful attempts to find a buyer for its approximately 350 U.S. stores.
Once a go-to destination for affordable, trendy fashion among teens and young adults, Forever 21 has struggled with declining mall traffic and increasing competition from online retailers such as Amazon, Shein, and Temu.
A Retail Giant’s Decline
Founded in Los Angeles in 1984 by South Korean immigrants, Forever 21 rapidly expanded, operating around 800 stores worldwide by 2016, including 500 in the U.S. However, financial difficulties led to its first bankruptcy filing in September 2019, resulting in the closure of over 150 locations.
The company is currently owned by Catalyst Brands, an entity formed on January 8 through the merger of Forever 21’s previous owner, Sparc Group, and department store chain JCPenney.
Store Closures and Liquidation Plans
Reports indicate that Forever 21 may close at least 200 of its remaining 350 stores as part of its latest restructuring efforts. According to Reuters, the company is preparing for liquidation sales while pursuing a court-supervised sale and marketing process for some or all of its assets.
Despite the bankruptcy, Forever 21’s U.S. stores and website will continue operations, and its international locations remain unaffected. The company’s estimated assets range between $100 million and $500 million, while its liabilities fall between $1 billion and $10 billion. The filing also notes that Forever 21 has between 10,001 and 25,000 creditors.
The Future of Forever 21
If a successful buyer emerges, the company could avoid a complete shutdown and continue operating in some capacity. Forever 21’s trademark and intellectual property remain under the control of Authentic Brands Group (ABG), which may explore ways to keep the brand alive.
Despite its struggles, Authentic Brands remains optimistic about Forever 21’s future. “Retail is changing, and like many brands, Forever 21 is adapting to create the right balance across stores, e-commerce, and wholesale,” said Jarrod Weber, Global President of Lifestyle at ABG.
He added that the restructuring presents an opportunity to modernize Forever 21’s distribution model and position it as a competitive force in fast fashion for years to come.
