Forever 21 has filed for bankruptcy in the US.
According to Reuters, this is the second time the retail chain has filed for bankruptcy, largely due to competition with fast fashion and a decline in mall traffic. The first time was in 2019, when they closed 200 stores. There are currently around 350 stores in America.
"We've 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," Brad Sell, finance chief at F21 OpCo said.
Chinese retailers like Shein and Temu can maintain low prices with the de minimis exemption, which, in Latin, translates to extremely small or inconsequential. In this case, fast fashion websites use the exemption to their advantage because the US waives tariffs on imported items that cost less than $800 and are shipped to individuals.
The company will have a court-supervised sale and marketing process for its assets, which are valued between $100 million and $500 million. At the same time, there will be liquidation sales at all of Forever 21’s U.S. stores. Per court documents, F21 OpCo has liabilities ranging from $1 billion to $10 billion.
Forever 21 filed for bankruptcy in 2019; that ended when Sparc Group acquired it. It’s now owned by Catalyst Brands, an entity that encompasses Sparc and JC Penney.
The retail chain first opened in 1984 by South Korean immigrants and continued to rise in popularity both in the U.S. and abroad. By 2016, it had 800 global stores, with 500 of those in America.
Forever 21’s international stores won’t be impacted by the bankruptcy filing.
