American fashion brand Forever 21 is set to permanently shut down its U.S. operations after filing for bankruptcy for the second time in six years.
The manager of the fashion brand´s operations in the U.S. blamed foreign competition in fast fashion from chains like Shein and Temu, as well as rising costs, economic challenges, and evolving fashion trends for the company´s demise.
For the time being, however, Forever 21 stores and the company’s U.S. website will remain open, as the brand starts 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.
Causes of Forever 21’s shut down
The retail industry is facing a major crisis. Federal figures that were released last Monday show that retail brands have warned investors that growth is expected to be lower this year. In the U.S., retail sales only rose 0.2% in February.
Forever 21 may be shutting its US stores after filing for bankruptcy for the second time in six years.
The company’s chief financial officer says the brand has been “unable to find a sustainable path forward given competition from foreign fast-fashion companies.” pic.twitter.com/AmVklvsQMb
— Pop Crave (@PopCrave) 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 shut down this year. Retail store shutdowns hit highs not seen since the pandemic, with brands like fabric seller Joann, Big Lots, and Party City being among the most prominent retailers to shut down stores this year.
The retailer’s sales peaked in 2015
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 it 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 turn of the decade, Forever 21 has struggled to keep up with online retailers like Amazon, Temu and Shein, given that they heavily relied on in-store purchases at locations like shopping malls.
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” was the fact that they were at a disadvantage with foreign retailers that use the “de mimis” exemption, a U.S. law allowing goods worth less than $800 to go through customs with less import duties and inspections. The U.S. government under both Biden and President Trump attempted to take steps to fight these exemptions, but efforts were paused in February, meaning cheap goods from China are still able to take advantage of the exemption and enter the country.