Forever 21, once a symbol of trendy and affordable fashion for young shoppers, appears on the brink of another significant downturn. The U.S.-based operator of Forever 21 is reportedly preparing to close nearly 200 stores as the brand faces the very real possibility of a second bankruptcy filing. As hundreds of unprofitable Forever 21 stores face shutdown, the future of the brand hangs in the balance, leaving many wondering if this marks the end of an era for the once-popular fast-fashion chain.
Forever 21 faces potential second bankruptcy
F21 OpCo, the U.S.-based operator of Forever 21, is reportedly preparing to close at least 200 additional stores as part of an impending bankruptcy filing, which could take place as early as March, according to a report by Bloomberg on February 19th.
The report further states that the company is seeking a buyer for its remaining locations. However, F21 OpCo may be forced to liquidate its entire chain of approximately 350 stores if no qualified buyer emerges.
Some of the stores slated for closure have been unprofitable for years, with F21 OpCo frequently withholding royalties and rent payments elsewhere to sustain them, Bloomberg noted.
While this would be F21 OpCo’s first bankruptcy, it would mark the second for the Forever 21 brand. The operator was established following Forever 21’s 2019 bankruptcy, when Authentic Brands Group, Simon Property Group, and Brookfield Asset Management acquired the retailer’s assets.
Is this the end of the road for Forever 21?
The Forever 21 trademark and intellectual property are owned by apparel chain operator Authentic Brands Group, which licenses them to F21 OpCo, which may soon undergo a Chapter 11 bankruptcy process.
Bloomberg noted that Authentic Brands’ ownership of the Forever 21 brand would remain unaffected by any bankruptcy proceedings. So, regardless of F21 OpCo’s potential sale or liquidation, Authentic Brands intends to continue licensing Forever 21 to other retailers and distributors.
F21 OpCo is a unit of Catalyst Brands, the parent company of JCPenney and Lucky Brand. Catalyst Brands, as stated on its website, oversees SPARC Group’s portfolio, which includes Aéropostale, Eddie Bauer, Lucky Brand, and Nautica. Its shareholders include Simon Property Group, Brookfield Corporation, Authentic Brands Group, and Shein.
What led to Forever 21’s first bankruptcy?
Forever 21 was founded in 1984 by South Korean immigrants Do Won Chang and Jin Sook Chang. At the time of its first bankruptcy filing in 2019, the brand operated 549 stores in the U.S. and 251 internationally. As part of its restructuring plan, Forever 21 announced the closure of 350 locations worldwide, including 178 in the U.S.
Several factors contributed to the retailer’s financial struggles. Like many traditional brick-and-mortar fashion brands, Forever 21 faced declining revenue as online shopping surged. Its core customer base—millennials—gravitated toward digital-first retailers such as ASOS and e-commerce giants like Amazon, leaving Forever 21 struggling to compete.
Another major issue was overexpansion. Despite dwindling foot traffic, the company continued to open large-format stores, leading to high overhead costs that became unsustainable.
Additionally, consumer preferences shifted. The “cheap chic” fashion trend that Forever 21 once dominated had fallen out of favor. Younger shoppers began prioritizing higher-quality, affordable fashion, which further eroded the brand’s appeal and sales.
Ultimately, a combination of e-commerce disruption, excessive store growth, and changing fashion trends pushed Forever 21 into its first bankruptcy.