Fast-fashion retailer Forever 21 has filed for Chapter 11 bankruptcy protection for the second time in six years. The company’s U.S. operator has initiated liquidation sales while seeking potential buyers through a court-supervised sale and marketing process.
Founded in Los Angeles in 1984 by South Korean immigrants Do Won Chang and Jin Sook Chang, Forever 21 rapidly became a staple in American malls, offering trendy apparel at affordable prices. However, in recent years, the retailer has faced stiff competition from online fast-fashion giants like Shein which has eroded its market share.
Additionally, challenges such as rising costs, economic headwinds, and shifting consumer preferences have further strained the company’s financial health.
In its bankruptcy filing, Forever 21 reported debts totaling $1.58 billion and losses exceeding $400 million over the past three years, including a $150 million loss in 2024. The company projects an EBITDA loss of $180 million in 2025.
Despite efforts to stabilise operations following its 2019 bankruptcy, these financial challenges have necessitated the current restructuring.
Forever 21’s U.S. stores and website will remain open, at the same time, its international operations, managed by other licensees, will remain unaffected. The company plans to shift focus towards its online retail operations, restructuring to adapt to the evolving retail landscape.
