Forever 21 Files Bankruptcy, Blames Shein and Temu
Once-dominant fast-fashion retailer Forever 21 has filed for bankruptcy protection for the second time in six years and plans to close all of its approximately 354 U.S. stores. The company, which employs more than 9,200 people across the country, directly blamed Chinese e-commerce giants Shein and Temu for its demise, citing their ability to sell products at significantly lower prices.
Store liquidation sales have already begun as the company winds down operations, though executives say they’re still open to last-minute acquisition offers that could potentially save some locations. According to Axios, the bankruptcy filing represents an “orderly wind down” of the retailer’s U.S. business.
Blaming the De Minimis Loophole
In court filings, Forever 21’s co-chief restructuring officer Stephen Coulombe specifically pointed to foreign competitors’ ability to exploit a U.S. trade law loophole as a primary factor in the company’s failure. The de minimis exemption allows goods valued under $800 to enter the United States without import duties, giving overseas retailers a significant price advantage.
“The ability for non-U.S. retailers to sell their products at drastically lower prices to U.S. consumers has significantly impacted the Company’s ability to retain its traditional core customer base,” Coulombe stated in court documents. “Despite wide-spread calls from U.S. companies and industry groups for the U.S. government to create a level playing field for U.S. retailers by closing the exemption, U.S. laws and policies have not solved the problem.”
The retailer had previously attempted to counteract this competitive threat by partnering with Shein in 2023, but CNBC reports the arrangement failed to stem mounting losses or lead to regulatory changes.
Forever 21 stores in the U.S. will hold liquidation sales and the website will continue to run while operations wind down. https://t.co/wqndRTwrXU
— 12NewsNow (@12NewsNow) March 17, 2025
A Dramatic Fall for a Fast-Fashion Pioneer
The bankruptcy marks a stunning reversal for a company that helped pioneer the fast-fashion movement in the United States. Founded in 1984, Forever 21 expanded rapidly over several decades, reaching its peak with 43,000 employees and approximately $4 billion in annual sales. Its affordable trendy clothing, accessories, and footwear made it a staple in American shopping malls and a favorite destination for teenage shoppers.
After emerging from its first bankruptcy in 2019, Forever 21 initially showed signs of recovery. The business was acquired by a consortium including Authentic Brands Group, Simon Property Group, and Brookfield Property Partners. In fiscal 2021, it generated $2 billion in revenue and $165 million in EBITDA, demonstrating apparent stability.
However, the retailer’s fortunes quickly deteriorated amid inflation, supply chain challenges, shifting consumer preferences, and intensifying competition from online fast-fashion platforms. Over the past three fiscal years, the company lost more than $400 million, including $150 million in fiscal 2024 alone.
Forever 21 is set to close all stores in the U.S. after filing for bankruptcy for a second time. pic.twitter.com/SGvyC2t5Do
— Pop Base (@PopBase) March 17, 2025
Part of a Broader Retail Apocalypse
Forever 21’s closure is part of an accelerating trend in the retail sector. Approximately 15,000 store closures are expected across the United States in 2025, nearly double the 7,325 stores that closed in 2024, according to data from Coresight Research cited by Axios.
The announcement comes as liquidation sales continue at several other major retailers, including Party City, Kohl’s, Macy’s, JCPenney, and Joann stores. These closures reflect the ongoing transformation of American retail amid changing consumer habits, economic pressures, and fierce competition from e-commerce platforms.
Brand May Live On Despite Store Closures
While the U.S. stores are closing, the Forever 21 brand itself isn’t necessarily disappearing. The company’s foreign assets are not included in the bankruptcy filing, and its international stores and website are expected to continue operating. The brand name and intellectual property remain under the ownership of Authentic Brands Group (ABG).
“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,” Jarrod Weber, global president of lifestyle at ABG, said in a statement. “Our U.S. licensee’s decision to restructure its operations does not impact Forever 21’s intellectual property or its international business. It presents an opportunity to accelerate the modernization of the brand’s distribution model, setting it up to compete and lead in fast fashion for decades to come.”
This positive spin comes despite ABG CEO Jamie Salter reportedly describing the Forever 21 acquisition as “probably the biggest mistake I’ve made” during a conference last year. The operating company currently owes $1.58 billion in various loans and more than $100 million to dozens of clothing manufacturers, primarily located in China and Korea.
For mall operators and shopping centers across the country, the loss of yet another anchor tenant represents another significant challenge in reimagining retail spaces for a changing economy. The company’s 354 store closures will leave substantial vacancies in shopping centers already struggling with reduced foot traffic and tenant turnover.
