Forever 21 has filed for bankruptcy protection for a second time and is expected to close all its US stores as it faces stiff competition from Chinese-founded e-tailers such as Shein and Temu. The fast-fashion retailer had already started going out of business sales at over 350 locations, but is still holding out hope that a buyer could materialize and take over operations.
The operating company’s US business is headed for outright liquidation, but the brand name will live on under its owner, Authentic Brands Group. Forever 21 blames fast-fashion e-tailers like Shein and Temu for its demise, citing their use of trade law loopholes that undercut its business.
The company had sought a buyer for several months, with over 200 potential bidders signing confidentiality agreements, but no viable deal came together. Despite efforts to restructure, Forever 21 lost over $400 million in the last three fiscal years and projects it will lose $180 million in EBITDA through 2025.
The brand’s international stores and website are expected to continue operating, while its intellectual property is not up for sale. The owner of Forever 21’s operating company, Sparc Group, has reorganized to form a new company dubbed Catalyst Brands, which may find new operators willing to run the business in the US or internationally.
Competing fast-fashion retailers like Shein and Temu have gained significant market share due to their use of de minimis exemption, allowing them to import goods at lower costs. The exemption has been criticized for creating a level playing field that favors foreign e-tailers over domestic companies.
Source: https://www.cnbc.com/2025/03/17/forever-21-files-for-second-bankruptcy-blames-shein-and-temu.html