Forever 21 has filed for Chapter 11 bankruptcy protection in the United States for the second time in six years.
The fast-fashion retailer is expected to close all of its 350 stores across the country.
According to the company’s US store operator F21 OpCo, the company will conduct liquidation sales at its stores while seeking potential buyers for its assets.
Forever 21's online platform and stores will continue to operate temporarily as the business winds down.
The company’s assets are estimated to be between $100 million and $500 million with liabilities in the range of $1 billion and $10 billion, the bankruptcy filing showed.
Tough competition
Forever 21 cited several factors contributing to its financial woes, including competition from online retailers, notably Chinese rivals Shein and Temu.
It also pointed to declining mall traffic, shifting consumer preferences, rising operational costs and the de minimis exemption, which allows goods valued under $800 to enter the US without import duties, giving foreign competitors an advantage.
“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, as well as rising costs, economic challenges impacting our core customers, and evolving consumer trends,” F21 OpCo chief financial officer Brad Sell said in a statement.
The company’s international stores and websites, which are operated by different licensees, are not affected by the bankruptcy filing.