Forever 21 set to shut down its U.S. operations as it files for bankruptcy

Forever 21, which a decade ago was seen as a leader in youth fashion retail, is set to permanently close all its U.S. stores as it files for bankruptcy for a second time.

In a Sunday release, the operator of Forever 21’s U.S. unit said foreign competition from fast-fashion groups, rising costs, economic challenges impacting its core customers, and evolving consumer trends were to blame for the development.

For the time being, stores and the company’s U.S. website will remain open as the company begins winding down operations and seeks a last-minute bidder for its assets.

Founded in 1984 by Korean immigrants in California, Forever 21 grew to $1 billion in annual sales by 2005. The store quickly became a mall staple for millennials, alongside H&M and Abercrombie&Fitch, looking for designer-inspired styles for affordable prices.

A decade later, the firm’s sales peaked at more than $4 billion, while its founders Jin Sook and Do Won “Don” Chang, were estimated to hold a combined net worth of $5.9 billion.

“By relentlessly chasing trends and catering to an ever-widening market — young women and matrons, men and toddlers — Forever 21 has positioned itself as a retail powerhouse, the American answer to fast fashion emporiums like the European-based Zara, Mexx and H&M,” the New York Times wrote in 2007.

Yet, as the 2010s wore on, the brand began to be eclipsed by online rivals and cheaper fast-fashion retailers. Its reliance on foot traffic at malls began to prove a liability amid a society-wide shift away from brick-and-mortar retail.

In 2019, Forever 21 filed for bankruptcy for the first time, hoping to become a more efficient operation. But the Covid-19 pandemic only accelerated the firm’s woes, even as it was bought out of bankruptcy by Authentic Brands, the operator of other major retailers and two major mall operators.

In a 2024 interview, the CEO of Authentic called the purchase of Forever 21 “probably the biggest mistake I made.”

Ultimately, today’s youth demographic simply moved on from the Forever 21 brand, experts said.

“Forever 21 was the brand that the former generation used,” said Roger Beahm, a marketing professor and director of the Retail Learning Labs at Wake Forest University, told the Los Angeles Times. “Today’s shoppers want their own brand, they want their own identity.”

In its latest bankruptcy filing, Forever 21 listed assets of between $100 million and $500 million and liabilities of $1 billion to $10 billion.