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Forever 21’s U.S. division has filed for Chapter 11 bankruptcy for the second time in six years, struggling against declining mall foot traffic and growing competition from online retailers, Reuters reported.
With no suitable buyer for its 350 U.S. stores, this bankruptcy filing likely signals liquidation for the company. However, Forever 21’s brand name and intellectual property may live on in some form under its current owner, Authentic Brands Group.
Why Did Forever 21 File for Bankruptcy Again?
The retail landscape has changed dramatically over the past decade. Several factors have led to Forever 21’s downfall, including:
The Rise of E-Commerce – More shoppers are turning to online fashion retailers instead of visiting physical stores.
Declining Mall Traffic – Mega malls, once Forever 21’s stronghold, are no longer as popular.
Intense Competition – Brands like Shein, Zara, and H&M dominate the fast-fashion space with aggressive pricing and trendy collections.
This isn’t the first time Forever 21 has struggled financially. Back in 2019, the company filed for Chapter 11 bankruptcy and was acquired by Sparc Group, a joint venture between Authentic Brands Group (ABG), Simon Property, and Brookfield Asset Management Inc.
What Happens Next?
Forever 21 has announced that it will:
Conduct liquidation sales at its physical stores.
Sell and market its assets under court supervision.
According to a Delaware bankruptcy court filing, Forever 21’s:
Assets are valued between $100 million and $500 million
Liabilities range between $1 billion and $10 billion
While Forever 21’s U.S. stores and website will remain operational, its international stores are unaffected by this bankruptcy.
The Future of Forever 21: Will It Survive?
Forever 21, originally founded by South Korean immigrants Do Won Chang and Jin Sook Chang in Los Angeles, was once a dominant force in affordable fashion.
Today, the brand is owned by Catalyst Brands, a company formed through the merger of Sparc Group and JCPenney on January 8, 2024.
Interestingly, Authentic Brands CEO Jamie Salter—who now owns Forever 21’s trademark and intellectual property—called acquiring the brand "the biggest mistake I made," according to Reuters.
With its physical stores struggling, Forever 21’s future may lie in online sales, licensing, or rebranding efforts. Whether it can adapt to the changing retail landscape remains to be seen.
