Succumbing to competition from online retailers such as Amazon and Temu, officials at Forever 21 announced this week the company has filed for bankruptcy protection.
It’s the second time in bankruptcy for Forever 21, which also announced it would be closing down its U.S. business.
F21 OpCo, which runs Forever 21 stores, said late Sunday that it will wind down the business in the United States under Chapter 11 bankruptcy protection while determining if it can continue as a business with a partner, or if it will sell some or all of its assets.
“While we have evaluated all options to best position the company for the future, 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,” Chief Financial Officer Brad Sell said in a statement posted to the company’s website.
Forever 21 stores in the United States will hold liquidation sales and the website will continue to run while operations wind down. The retailer’s locations outside of the United States are run by other licensees and are not included in the bankruptcy filing. International store locations and websites will continue operating as normal, according to a report by The Associated Press.
Authentic Brands Group owns the international intellectual property associated with the Forever 21 brand and may license the brand to other operators, F21OpCo said.
Jarrod Weber, global president, lifestyle at Authentic Brands Group, said the restructuring lets Forever 21 “accelerate the modernization of the brand’s distribution model, setting it up to compete and lead in fast fashion for decades to come. We’re building a direct creation-to-shelf model that moves faster.”
He added that, “We are receiving lots of interest from strong brand operators and digital experts who share our vision and are ready to take the brand to the next level.”
Forever 21, which first filed for bankrupty in 2019, joins other retailers that have filed for Chapter 11 or are liquidating in recent months as retailers face a slowdown in consumer spending and are navigating rising operating costs amid inflationary pressures. They include fabric and crafts retailer Joann Inc and Party City. In February, Outdoor apparel seller Liberated Brands, which has operated stores for surfer and skater-inspired labels like Quiksilver, Billabong and Volcom, filed for bankruptcy — and said it plans to shutter its locations across the U.S., according to the AP report.
