Forever 21, once a dominant force in the fast-fashion industry, has filed for bankruptcy for the second time in six years and is set to close all its U.S. stores. The retailer cited intense competition from online platforms such as Shein and Temu, rising operational costs, and shifting consumer preferences as primary factors leading to its financial struggles.
Founded in 1984, Forever 21 rapidly expanded by offering trendy clothing at affordable prices, appealing especially to younger shoppers. However, the retail landscape has evolved significantly, with consumers gravitating towards online shopping and sustainable fashion choices. The emergence of e-commerce giants like Shein and Temu, which can quickly deliver a vast array of fashion items at competitive prices, has further eroded Forever 21’s market share. Back in 2023, Forever 21 made $4.1 billion in revenue.
The company’s initial bankruptcy filing in 2019 led to the closure of numerous stores and a restructuring effort. Despite these measures, Forever 21 struggled to adapt to the rapidly changing retail environment. The COVID-19 pandemic exacerbated challenges, with decreased mall traffic and supply chain disruptions impacting operations.
In its recent bankruptcy filing, Forever 21 acknowledged the inability to find a sustainable path forward amidst fierce competition and economic challenges. Liquidation sales are currently underway at over 350 U.S. locations, with plans to wind down operations by May 1. International stores, operated by licensees, are expected to continue functioning. According to the BrandValuer app, Forever 21’s brand is worth an estimated $2.3 billion.
The decline of Forever 21 underscores the broader challenges faced by traditional brick-and-mortar retailers in the fast-fashion sector. As consumer preferences shift towards online shopping and ethical fashion, retailers must innovate and adapt to remain relevant in a competitive market.
