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Tuesday March 18, 2025

Forever 21 faces retail death: Bankruptcy signals final nail in coffin for US operations

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The once-thriving retailer Forever 21 is on the brink of collapse, filing for bankruptcy amid financial ruin.

Forever 21, once a dominant force in fast fashion, is spiralling towards a grim fate after filing for bankruptcy protection in the United States. The retailer, known for its trendy yet affordable clothing, is now facing a stark reality—its American operations are on the verge of collapse.

In a statement, the company confirmed that its US stores and online platform would remain open for now, but the process of winding down operations has officially begun. While the brand’s international stores, run by separate licence-holders, remain unaffected, the future of its US presence looks increasingly bleak.

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This isn’t the first time Forever 21 has faced financial turmoil. In 2019, the company previously sought bankruptcy protection, only to be rescued by a group of investors. However, this time, the outlook is far grimmer.

Drowning in Debt and Competition

Once a staple for young shoppers, Forever 21 has been struggling to survive in an industry transformed by online retail and shifting consumer habits. The brand built its empire on cheap, fast-turnaround fashion, but soaring costs, growing competition, and economic uncertainty have made its business model unsustainable.

Brad Sell, the company’s chief financial officer, painted a dire picture in his statement. He blamed the brand’s downfall on rising operational costs, financial pressures on its core customers, and fierce competition from foreign fast-fashion retailers such as Shein and Zara.

“We have been unable to find a sustainable path forward,” he admitted, confirming that the company is now preparing to liquidate its assets. Sales will begin soon at Forever 21 stores across the country as the brand desperately tries to claw back some financial ground.

The company hinted at a faint glimmer of hope, stating that if a buyer emerges, a full shutdown may be avoided. However, with retail giants like H&M and Zara continuing to dominate the industry, many analysts believe this is simply a delay of the inevitable.

From Fashion Empire to Retail Collapse

Forever 21’s journey from retail royalty to financial ruin has been years in the making. Founded in Los Angeles in 1984 by South Korean immigrants, the brand rapidly became a global powerhouse. At its peak in 2016, it operated 800 stores worldwide, including 500 in the US alone.

But the retail landscape changed. As the rise of online shopping reshaped consumer habits, Forever 21 failed to adapt. While rivals invested heavily in e-commerce and sustainable fashion, Forever 21 clung to its traditional brick-and-mortar approach, a move that ultimately backfired.

The brand also faced criticism over its labour practices and environmental impact, with fast fashion increasingly seen as an ethical and environmental problem. Younger shoppers, once its core audience, began shifting towards brands that prioritised sustainability—leaving Forever 21 struggling to maintain its relevance.

What’s Next?

The bankruptcy filing under Chapter 11 allows the company to delay payments to creditors and attempt to restructure or sell parts of its business. However, given its ongoing struggles, a revival seems unlikely.

For now, Forever 21’s American stores will soon become the scene of massive liquidation sales, as the company tries to offload its remaining stock. Meanwhile, customers and employees alike are left wondering whether this is truly the end for one of fast fashion’s biggest names.

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