A Popular Fashion Retail Chain Is Going Bankrupt And Closing All Remaining Stores

2025 is, so far, looking like a particularly bad year for American retailers. Only three full months into the calendar and huge chains like Nordstrom, the iconic Macy's, and discount department store Kohl's have all warned that they will be closing numerous locations across the country. Meanwhile, other major chains like craft retailer Joann Fabric, Party City, and Big Lots have thrown in the towel completely with bankruptcy filings and widespread closures.

In fact, a January Coresight Research report estimated that 15,000 stores would close by the end of 2025 — more than twice the amount in 2024. Joining that list of closures is Forever 21, the once-popular fast fashion chain that boasted over 800 stores around the world, and 500 in the U.S., at it's peak. However, as of mid-March, F21 OpCo, LLC — the brand licensee and U.S. operator for Forever 21 stores — entered Chapter 11 bankruptcy. This announcement came on the heels of previous reports that the company planned to close at least 200 stores in an effort to restructure. 

Unfortunately, retail bankruptcy increases the risk of total liquidation, and given the fact this is the company's second bankruptcy in just six years — the first occurring in 2019 — and barring a last-minute buyers, it appears that Forever 21 will shut down entirely in the U.S., leaving only their international stores.

Despite the fact Forever 21 began operations in 1984, its popularity truly peaked in the early 2000s. The company saw great success with its fast fashion model that was primarily marketed toward young adults. Unfortunately, growing competition from companies like Temu and Shein, combined with shifting consumer spending habits, hit the company hard, and in 2019, Forever 21 filed it's first bankruptcy. 

The brand was saved at that time by a combination of mall owners — Simon Property Group and Brookfield Corporation — and a brand development company — Authentic Brands Groups — in 2020. While this gave Forever 21 a second chance at avoiding liquidation, it ultimately only served to delay the inevitable. It's worth mentioning that in 2024, Jamie Salter, the CEO of Authentic Brands Group, expressed regret at the acquisition, saying that buying the retailer was "probably the biggest mistake I made," as reported by Newsweek.

In the company's 2025 bankruptcy filing press release, Brad Sell, the Chief Financial Officer of F21 OpCo said, "We have been unable to find a sustainable path forward, given competition from foreign fast fashion companies, which have been able to [...] undercut our brand on pricing and margin, as well as rising costs, economic challenges impacting our core customers, and evolving consumer trends." As part of the bankruptcy filing, the final roughly 350 Forever 21 locations in the U.S. will close, with many having already shuttered their doors for good. 

It's worth mentioning that the company is technically still open to bids even as it liquidates it's U.S. locations. Plus, despite the closure of its brick and mortar stores, Forever 21 is still operating its website. It remains to be seen if Authentic Brands Group, which still controls Forever 21's international intellectual property, will license it to other operators or not. However, the likelihood of a buyer at this point is small. While the company reports having between $100 million and $500 million in assets, its liabilities fall between $1 billion to $5 billion, as reported by The New York Times.

In mid-March F21 OpCo's legal counsel reported that the company intended on having all of its remaining stores fully closed by the end of April 2025. However, there is a good chance that many of its locations will be vacated before then. The company also began its official going-out-of-business sales at all remaining locations beginning the last week of March. 

As for the company's lenders and potential bankruptcy restructuring outcome, it's unclear how the company might move forward. According to Bloomberg, at the end of March F21 OpCo filed a proposal that would mean its lenders get very little back of what is owed to them — a maximum of 3% repayment. Per F21 OpCo's case filing, the final hearing with respect to First Day Motions will be held on April 15, 2025.