The parent company of Forever 21, a pioneer in fast fashion, filed for bankruptcy protection, it announced March 16 — marking Forever 21’s second bankruptcy in six years.
The retail chain has begun liquidation sales at all of its approximately 300 stores. In a bankruptcy filing in Delaware, the chain reported its projected assets to be between $100 million and $500 million, while liabilities are stated to be between $1 billion and $10 billion. The filing specifically points to rivals Temu and Shein as being factors in their demise.
Forever 21 ranks No. 111 in the Top 2000. The database is Digital Commerce 360’s ranking of North America’s leading online retailers by annual web sales. Prior to the bankruptcy filing, Digital Commerce 360 projected that Forever 21’s online sales would reach $904.84 million in 2025.
Why Forever 21 filed for bankruptcy
“Following the conclusion of our strategic review and after careful deliberation, we made the decision to file for chapter 11 to implement a court-supervised marketing process to solicit a going concern transaction, and, in the absence of such an arrangement, an orderly wind down of operations,” said Brad Sell, chief financial officer at F21 OpCo, which operates Forever 21 stores. “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, as well as rising costs, economic challenges impacting our core customers, and evolving consumer trends.”
Still, along with the changing marketplace and competition from overseas retailers, experts say Forever 21 was a victim of its own stumbles as well.
“Forever 21’s decline is rooted in several key missteps that highlight traditional retailers’ challenges in today’s dynamic market,” said Sudip Mazumder, senior vice president and retail industry lead in North America for the digital business consultancy Publicis Sapient. “Their rapid expansion saddled them with high real estate costs as mall traffic dwindled and ecommerce boomed.”
Mazumder said the company’s fast fashion model, emphasizing ultra-trendy but low-quality items, increasingly conflicted with consumer shifts toward sustainability and quality. They also never fully engaged with their customers online, he noted.
Forever 21’s competitors
“Forever 21’s ecommerce efforts lagged, with a less competitive online presence compared to digitally focused competitors,” Mazumder said, noting that supply chain issues exacerbated this, including vulnerability to trade tensions and rising operational costs.
Competitors including Shein — which took a stake in Forever 21 in 2023 — and Temu offered lower prices and squeezed Forever 21’s margins. China-based Shein and Temu were able to use a loophole in laws that allowed for shipments under $800 to be exempt from tariffs.
“Economic uncertainty made consumers more price-sensitive, favoring cheaper online alternatives,” Mazumder said.
Ultimately, when Forever 21 couldn’t fight Shein, they partnered with each other. But the two businesses were never in sync.
“The failed partnership with Shein underscored the difficulty in merging contrasting business models,” Mazumder said. “While Shein operated on an ultra-fast fashion digital platform, Forever 21 remained rooted in an omnichannel approach with physical stores, complicating integration and operational alignment.”
Implications for other retailers
The implosion of Forever 21 carries a warning to other retailers, Mazumder said.
“For other retailers, Forever 21’s implosion underscores the importance of sustainable growth and adapting to consumer values, particularly around sustainability,” he explained.
He also said that enhancing technological investment and online customer engagement is critical to an effective omnichannel strategy. Other brands will pick up the pieces and move on.
“Established brands like H&M and Zara and digital-first companies like Shein and Temu are poised to capture the void left by Forever 21,” he stated. “Additionally, retailers like Target and Walmart are expanding into trendy apparel, while the rise of secondhand platforms like ThredUp indicates a shift towards sustainability.”
Greg Jones, CEO of in-store digital sales platform tutch, agrees that Forever 21 stumbled when it came to having a robust digital presence.
“Forever 21 largely stuck to a traditional retail model and treated its in-store shopping experience separate from its online counterpart,” Jones assessed.
He added that often what customers saw online wasn’t available in store. Meanwhile, if they couldn’t find what they wanted in-store, they had to go back online to order it themselves.
“As a result, this made it difficult for shoppers to engage with the brand in a way they preferred — whether it be researching product availability prior to heading into the store or using digital touchpoints integrated throughout physical locations,” Jones explained.
While liquidating, Forever 21 is still open for buyers, or its brand could be bought at a bargain basement price and brought back to life, much like how Bed Bath, & Beyond lives on in a largely virtual format.
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