Forever 21 Files for Bankruptcy, Plans U.S. Store Liquidation

Forever 21 Files for Bankruptcy, Plans U.S. Store Liquidation

Forever 21, the popular apparel chain, announced on Monday that it has filed for voluntary bankruptcy in the United States and will begin the "orderly wind down" of its U.S. stores. The company is also exploring the possibility of a sale while managing liquidation sales across its U.S. locations.

The fast-fashion retailer, in collaboration with its lenders, plans to liquidate its U.S. stores while simultaneously undergoing a court-supervised sale and marketing process for some or all of its assets, according to a press release from F21 OpCo LLC, the U.S. operator of the brand.

This marks Forever 21's second Chapter 11 bankruptcy filing in six years, following a similar move in 2019, which led to a significant reduction in its store count. The company currently operates 540 stores in the U.S.

While U.S. stores will remain open and continue serving customers during the bankruptcy process, international locations, which are managed by different licensees, are not part of the filing.

Founded in 1984 in Los Angeles by South Korean couple Do Won and Jin Sook Chang, Forever 21 became a staple in U.S. shopping malls, offering affordable, fast-fashion versions of high-end brands to teen shoppers.

However, according to Neil Saunders, managing director of GlobalData, the company has faced significant challenges in recent years, including a weak apparel market and tough competition from low-cost Chinese marketplaces.

"Forever 21 hasn't adapted well to these challenges," Saunders noted. "Its product selection has been underwhelming, and the brand has lacked a clear identity for some time."

As a result, Saunders suggests that the brand has lost appeal, particularly among younger consumers. He also speculated that Forever 21 might continue online via a licensing sale, though any potential deal would likely reflect the brand's diminished status.

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