Iconic Mall Retailer Files For Bankruptcy For a Second Time, To Liquidate All Stores

Forever 21’s U.S. retail operator has filed for bankruptcy for the second time, citing inflationary pressures and competition from online fast-fashion giants like Shein and Temu. The company is now looking to liquidate assets while exploring a possible sale.

Key Facts:

Forever 21’s U.S. operator, F21 Opco, filed for Chapter 11 bankruptcy in Delaware, listing $1.58 billion in total funded debt.
The brand struggled with rising inventory and labor costs, as well as stiff competition from online retailers.
This marks the second bankruptcy for Forever 21, the first occurring in 2019, which led to store closures and restructuring.
The company’s international stores, run by licensees, are not affected by the filing.
Liquidation sales are expected while the company undergoes a court-supervised sales process.

The Rest of The Story:

Forever 21, once a dominant force in the fast-fashion industry, has been struggling for years.

Despite a 2019 bankruptcy and subsequent buyout by Simon Property Group, Brookfield Corp., and Authentic Brands, financial troubles persisted.

Rising costs of goods and wages, coupled with competition from e-commerce platforms like Shein and Temu, have made it difficult for the brand to recover.

The latest bankruptcy filing allows Forever 21 to conduct liquidation sales while seeking potential buyers.

If a suitable buyer emerges, the company could avoid a full shutdown and continue operating under new ownership.

However, if a sale does not materialize, more store closures and layoffs are likely.

Adding to its struggles, Forever 21 has pointed to unfair competition from foreign retailers using the “de minimis” exemption, which lets low-value imports enter the U.S. without tariffs.

The Trump administration has explored ways to close this loophole, but for now, it remains a challenge for U.S.-based retailers.

BREAKING: Forever 21's US operator files for bankruptcy after years of poor performance https://t.co/MlAoSjUGz2

— Bloomberg Markets (@markets) March 17, 2025

Commentary:

Forever 21’s downfall is another casualty of two major forces reshaping retail—rampant inflation and the shift to online shopping.

As costs for wages, rent, and materials rise under the current economic policies, brick-and-mortar retailers find themselves squeezed harder than ever.

Consumers, feeling the pinch from higher grocery and gas prices, have less disposable income to spend on fashion, further hurting retailers like Forever 21.

At the same time, malls—once the lifeblood of brands like Forever 21—are fading into irrelevance.

Foot traffic has plummeted as shoppers turn to the convenience of online platforms that offer similar styles at lower prices and with faster shipping.

Shein and Temu, with their aggressive pricing and endless selection, have siphoned off Forever 21’s core customers.

Even major retailers like JC Penney and Bed Bath & Beyond have faced similar fates.

With consumer habits shifting permanently toward digital shopping, more traditional retailers will struggle to survive.

While some, like Forever 21, may attempt to adapt through partnerships or online expansion, many will not make it.

The brand’s struggles also highlight broader economic concerns.

The de minimis exemption, which allows foreign companies to bypass tariffs, gives unfair advantages to overseas competitors at the expense of American businesses.

While there have been calls to fix this loophole, action has been slow.

If nothing changes, more American retailers could face the same fate as Forever 21.

The Bottom Line:

Forever 21’s second bankruptcy underscores the challenges facing brick-and-mortar retail.

Inflation, changing consumer habits, and competition from online retailers have made survival increasingly difficult.

Unless economic conditions improve or policies change to level the playing field, more store closures and liquidations are inevitable.