Nearly one month after popular fast fashion brand Forever 21 began liquidation sales at its U.S. locations, the retailer has officially filed for bankruptcy for the second time in nearly six years, announcing late Sunday that it has begun “winding down” its U.S. operations.
All locations have begun going-out-of-business sales, and along with its website, normal operations and sales will continue as the formal winding down process begins.
“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,” Chief Financial Officer Brad Sell said in a statement.
Going-out-of-business sales began in mid-February for 236 locations (“Wave 1 locations”), which it says are the poorest-performing locations. Those locations will close the week of March 30. The remaining 118 locations (“Wave 2 locations) will close before May 1.
Gift cards will continue to be honored up until April 15.
At its height, Forever 21 operated at least 800 locations worldwide, boasting $4 billion in annual sales and employing 43,000 people. However, after its first bankruptcy filing in 2019, that number plummeted to 500 locations worldwide. If the company does not find a buyer within the coming weeks, its remaining 354 U.S. locations will shut their doors for good.
As of January 2024, there were 67 Forever 21 stores in California, more than any other state.
International locations, along with its international e-commerce business, will not be affected by the bankruptcy filing.
According to court documents, the company has approximately $1.6 billion in debt and reported that its assets are valued at an estimated $100 million to $500 million as of March 16.
Shopper leave a Forever 21 store at a shopping mall in Los Angeles County on Sep. 30, 2019. (Credit: Frederic J. Brown/AFP/Getty Images)
“On behalf of the Company, I’d like to express our deep appreciation for the hard work of our dedicated employees and their commitment to our customers,” said Sell. “We are also grateful for the many years of support from our partners and our loyal customers, who have allowed us to serve as a fashion industry leader and go-to retailer for generations.”
The Los Angeles-based company was founded in 1984, starting as a 900-square-foot store in California called Fashion 21. Through the late 1980s into the 1990s, the company quickly expanded across the United States before venturing into international markets.
This period of growth saw Forever 21 evolve from a small storefront into a recognized name in “fast fashion,” attracting a diverse customer base with its trendy, affordable clothing and rapidly changing inventory.
According to court documents, the company cited struggles connected to the historic rise in inflation beginning in 2021.
The company’s most notable online competitors include Temu and Shein, who take advantage of the “de minimis exemption,” which exempts goods valued under $800 from import duties and tariffs, allowing highly discounted prices of products. However, retailers have to pay these fees, which leads to higher prices in comparison.
