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Forever 21 filed for bankruptcy protection for the second time in six years and has already started liquidation sales at more than 350 stores, CNBC reported. Its US operations are expected to shut down entirely unless a buyer steps in.
Sparc Group, Forever 21's operator, had been searching for a buyer for months and contacted more than 200 potential bidders. Court filings show that 30 parties signed confidentiality agreements, but no viable deal materialized.
Talks with liquidators began in recent months, making it unlikely the chain will continue operating in the US. Competition from Chinese-founded online retailers Shein and Temu played a major role in Forever 21's collapse, according to court documents.
In a filing, Stephen Coulombe, the company's co-chief restructuring officer, said Shein and Temu were able to "pass significant savings onto consumers" by using the de minimis exemption, a trade law loophole that allows goods under $800 to enter the US without import duties.
"Retailers that must pay duties and tariffs to purchase product for their stores and warehouses in the United States, such as the company, have been undercut," Coulombe wrote.
Attempts to adapt to Shein's dominance included a 2023 partnership, but the effort failed to reverse Forever 21's losses. Over the last three years, the company lost more than $400 million, including $150 million in fiscal 2024 alone.
Despite the bankruptcy, Forever 21's brand name will survive under Authentic Brands Group, which owns its intellectual property. The company's international stores and online presence are expected to remain open.
Jarrod Weber, Authentic Brands' global president of lifestyle, said the company is still receiving "lots of interest from strong brand operators and digital experts."
Forever 21 was once a powerhouse in fast fashion, employing 43,000 people and generating more than $4 billion in annual sales at its peak. Its downfall follows years of financial struggles, rising inflation, and shifting consumer habits.
The company currently owes $1.58 billion in loans and more than $100 million to suppliers, mostly in China and Korea.
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