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Forever 21 US operating company applied Chapter 11 Bankruptcy On Sunday, I will mark the first time in six years.
The F21 OPCO took the move after a retailer once known for affordable trending fashion among teenagers and young adults, failed to find buyers in around 350 US stores.
With most stores inside the mall, retailers say they've reduced pedestrian traffic and are now crippled by increased competition from online retailers.
“We consider competition from foreign first fashion companies that have been able to take advantage of the de Minimis exemption to undercut brands in terms of pricing and margins, and the economic challenges affecting consumer trends, Brad Sell, Chief Financial Officer of F21 OPCO, said according to Reuters.
It is likely that the remaining Forever 21 stores will be closed.
Shoppers are holding a brick and mortar pop-up within Forever 21 at Ontario Mills Mall in Ontario on Thursday, October 19, 2023. (Allen J. Scheven / Los Angeles Times / Getty Images)
De Minimis refers to standard customs procedures and customs duties for imports under $800 shipped to individuals. Some of the company's biggest e-commerce competitors are Amazon, Shein and Temu.
Forever 21 was founded in Los Angeles in 1984 by Korean immigrants. By 2016, there were around 800 stores operating worldwide, of which 500 were operating in US stores.
Bankruptcy Forever 21 First Fashion Not Fast enough to Meet Millennial FOMO
Pedestrians are walking at a Forever 21 store in San Francisco on August 29, 2019. (Justin Sullivan/Getty Images)
The clothing chain has been facing problems since its first trip to bankruptcy in September 2019, closing 150 of its 534 stores and selling the rest.
Forever 21 is currently owned by Catalyst Brands, an entity founded on January 8th through the merger of Forever 21's former owner, SPARC Group, and JC Penney, a department store chain owned since 2020 by Mall operators and Simon Property Group.
Forever 21 files for bankruptcy protection
Signs promoting store-wide sales will appear in the windows of Forever 21 stores, which are ready to close in San Francisco on February 20, 2025. (Justin Sullivan/Getty Images)
When news of the looming bankruptcy came to light last month, sources familiar with the issue said the company was preparing to close at least 200 of its remaining 350 locations as part of the bankruptcy process.
Currently, Reuters reports that F21 OPCO is planning to clear and sell stores while it goes through a sales and marketing process provided by some or all of the assets.
Pressure from Shein, Temu accelerates retail closure
21 Forever Stores in New York City on Friday, February 7th, 2025. (Getty Images / Iwamura via Getty Images / Bloomberg)
Its stores and websites in the US are open and continue to serve customers, and their international stores are not affected.
According to Reuters' acquired Delaware District Bankruptcy Court filings and liabilities ranging from $1 billion to $10 billion, the company listed its estimated assets in the range of $100 million to $500 million. The filing showed that there were between 10,001 and 25,000 creditors.
| Ticker | safety | last | change | change % |
|---|---|---|---|---|
| amzn | Amazon.com Inc. | 197.95 | +4.06 |
+2.09% |
| SPG | Simon Property Group Inc. | 161.21 | +1.73 |
+1.08% |
| Bum | Brookfield Asset Management Ltd. | 47.55 | +0.62 |
+1.32% |
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If the sale is successful, Forever 21 can move away from full operation.
Forever 21 trademarks and other intellectual property are owned by the authentic brand. Authentic continues to control brands that can live in some way. Jamie Salter, CEO of Authentic Brands, said last year that winning Forever 21 was “the biggest mistake I've made.”
Daniella Genovese and Reuters of Fox Business contributed to this report.
