Forever 21 will be closing all its stores in the United States this month. The fast-fashion retailer filed for bankruptcy a second time last month, citing rising competition from upstarts like Shein and Temu as the reason, NBC News reported.
“Certain non-U.S. online retailers that compete with the Debtors, such as Temu and Shein, have taken advantage of this exemption and, therefore, have been able to pass significant savings onto consumers,” Stephen Coulombe, the operating company’s co-chief restructuring officer worte in a court filing. “Consequently, 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.”
“Despite wide-spread calls from U.S. companies and industry groups for the U.S. government to create a level playing field for U.S. retailers by closing the exemption, U.S. laws and policies have not solved the problem,” he added.
The company had first filed for Chapter 11 bankruptcy in 2019 and subsequently shut down close to 200 stores.
Founded in 1984 by Korean immigrants Jin Sook Chang and Do Won Chang, the company captured the attention of consumers with trend-sensitive apparel at highly competitive prices. Competing against H&M and Abercrombie & Fitch, the company’s sales reached $1 billion by 2005 before eclipsing $4 billion by 2015.
Forever 21’s website will continue to operate while the company holds liquidation sales at its physical stores. The company said that Authentic Brands Group, which owns international intellectual property associated with the company, may license the brand to other operators as they seek a buyer for their assets. Together with Simon Property Group, the Authentic Brands Group bought Forever 21 out of bankruptcy for $81 million in February 2020.
“We have been unable to find a sustainable path forward,” said Forever 21’s chief financial officer, Brad Sell. “We have been struggling with rising costs and economic challenges which impact our customers and the evolving consumer trends.”
Stating his opinion on the company, Neil Saunders, a managing director and retail analyst at GlobalData, posted on his LinkedIn, saying, “The truth is that Forever 21 has lost any sense of personality. It has massive stores which are far too big for its needs, and which are full of product that lacks an identity and is nothing special.” He also added that he’s “not sure [if] there is a pathway for he brand to get back to the significant status it once had.”
According to Reuters, Forever 21 has more than 350 stores across the U.S. and the company claims that it operates 540 locations worldwide.
