Forever 21 is set to close hundreds of its US stores by the end of March as it struggles with economic pressures and increasing competition from low-cost online retailers like Shein and Temu, FOX Business reports.
The first wave of closures, impacting approximately 236 locations, is already underway and expected to be completed by the end of the month, according to court filings. The remaining stores are projected to shut down by May 1.
F21 OpCo, the operator of Forever 21 stores in the US, filed for bankruptcy protection in the Bankruptcy Court for the District of Delaware on Sunday. This marks the company’s second bankruptcy filing in six years, following its initial restructuring in 2019.
Brad Sell, CFO of F21 OpCo, cited increased competition, rising costs, and shifting consumer trends as key reasons for the company’s financial struggles.
“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,” Sell said in a statement.
Forever 21 has faced mounting pressure from fast-fashion e-commerce platforms like Shein and Temu, which offer low-cost apparel and accessories while benefiting from import duty exemptions on small shipments. These platforms have grown rapidly in popularity, particularly among budget-conscious consumers, further challenging traditional brick-and-mortar retailers.
Retail analyst John Mercer of Coresight Research noted that competitive pressures from these platforms are expected to drive even more store closures in 2025. His firm estimates that the US retail sector could see 15,000 store closures this year, despite approximately 5,800 new openings.
While Forever 21 is winding down its US operations, it is still seeking a buyer for some or all of its assets. However, Sarah Foss, Head of Legal at Debtwire, believes that it is “unlikely that a white knight will emerge to purchase all or a portion of its retail locations.”
Despite store closures, the Forever 21 brand itself is expected to persist in some form. Its intellectual property and trademarks are owned by an affiliate of Authentic Brands Group, which could explore alternative business models, such as online-only sales or international licensing deals, to keep the brand alive.
