Forever 21's Final Sale: The End of an Era

The fast-fashion giant Forever 21 is shutting down its U. S. operations. This is not the first time the company has faced financial trouble. It filed for bankruptcy protection in 2019. Now, it's doing it again. This time, the plan is to close all U. S. stores. The company is also considering selling some or all of its assets. This move comes as shopping malls see less foot traffic. Online retailers like Amazon, Temu, and Shein are giving traditional stores a run for their money. The company's chief financial officer, Brad Sell, pointed to tough competition. Foreign fast-fashion brands have an advantage. They can ship items to the U. S. without paying taxes or duties. This is thanks to a rule called the de minimis exemption. It allows shipments under $800 to enter the country tax-free. This makes it hard for Forever 21 to compete on price. Forever 21 stores in the U. S. will have liquidation sales. The website will stay up while the company winds down operations. Stores outside the U. S. are run by different licensees. They are not part of this bankruptcy filing. International locations and websites will keep operating as usual. Authentic Brands Group owns the international rights to the Forever 21 brand. It might license the brand to other operators. Jarrod Weber, Global President, Lifestyle at Authentic Brands Group, sees this as a chance. He wants to modernize the brand's distribution model. The goal is to make Forever 21 a leader in fast fashion for years to come. He is already talking to interested parties who share this vision. Forever 21's troubles are not new. In 2020, it was acquired by a group including Authentic Brands Group and mall owners. Early this year, its parent company merged with JCPenney. This created a new entity called Catalyst Brands. It includes other well-known brands. In 2023, Forever 21 partnered with Shein. This allowed Shein to sell Forever 21 items on its platform. It also let customers return Shein orders at some Forever 21 stores. Forever 21 is not alone in its struggles. Many retailers are facing a slowdown in consumer spending. They are also dealing with rising costs due to inflation. Joann Inc, Party City, and Liberated Brands have all faced similar issues. From January to mid-March, U. S. retailers announced over 3, 700 store closures. Forever 21's journey started in 1984. It rode a wave of popularity among young shoppers in the mid-1990s. Their popularity grew during the Great Recession. Shoppers were looking for bargains. But Forever 21 expanded too quickly. It missed the shift to online shopping. Critics say the company was slow to adapt. Now, it faces stiff competition from brands like Shein and Temu. They offer trendy items at lower prices. For example, a T-shirt at Forever 21 costs around $10. At Temu, it's $5. Neil Saunders, managing director of GlobalData, sees two main problems. Forever 21's stores are too big for current needs. They are also in malls with low foot traffic. The apparel market is weak. Competition from cheap online marketplaces has eroded Forever 21's standing. Its market share has taken a hit.