Forever 21 Declares Bankruptcy and Will Close Its U.S. Stores

• Forever 21 closes in the U.S.
• Shein and Temu impact its sales
• International stores will continue to operate

The fast fashion chain Forever 21 has declared bankruptcy for the second time and announced that it will close its operations in the United States.

The company faces strong competition from brands like Shein and Temu, which have dominated the market with their digital commerce strategies.

F21 OpCo, the operator of Forever 21 stores in the country, filed a voluntary bankruptcy petition in a Delaware court.

In the process, the company plans to conduct an orderly liquidation of its operations in the United States.

Forever 21 seeks buyers as it faces business challenges

However, the firm does not rule out the possibility of being acquired by another company to maintain part of its activities.

According to court documents, Forever 21 contacted more than 200 potential buyers in recent months, without success.

Stephen Colulombe, co-director of restructuring, noted that the brand was affected by the ‘de minimis’ exemption.

This mechanism allows the entry into the U.S. of products valued at less than $800 without paying tariffs, benefiting Shein and Temu.

President Donald Trump announced his intention to eliminate this exemption to curb the rise of Chinese commerce.

The measure seeks to regulate competition with platforms like AliExpress, Shein, and Temu, which have transformed the market.

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This is not the first time Forever 21 has faced financial problems.

In 2019, the brand declared bankruptcy and closed stores in the U.S., Asia, and Europe before being acquired by Sparc Group.

Despite the closure of physical stores in the U.S., its website and international stores will continue to operate, according to CNBC.

Additionally, the company clarified that its intellectual property is not for sale in this liquidation process.

The future of Forever 21 will now depend on potential investors and the impact of new trade regulations.

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