Forever 21 is turning out to be less permanent than its name suggests.
The fast-fashion brand is set to shut down all of its stores in the U.S. following a second bankruptcy filing. The company cited economic hardships and competition from overseas online retailers like Shein and Temu, per NBC News.
It's not the only retailer to announce closures in recent months. Fabric store Joann and Party City are also shutting down, and experts expect things to worsen. Retail hiring has slowed, and consumer spending growth has been weaker than anticipated, with sales rising just 0.2% last month — below the 0.6% expected by economists, according to The Wall Street Journal. The majority of sales went to online stores.
Forever 21, founded in 1984 by Korean immigrants Jin Sook and Do Won "Don" Chang, once reigned supreme in youth fashion retail. By 2015, the brand had peaked with over $4 billion in sales, but shifting consumer preferences and the rise of ultra-cheap online rivals gradually eroded its dominance.
The retailer relied on foot traffic in an e-commerce age, leading to a 2019 bankruptcy filing. Attempts to restructure the company failed to stop the decline, and even the CEO of Authentic Brands, which acquired Forever 21, said the purchase was “probably the biggest mistake I made.”
Sarah Foss, global head of legal at Debtwire, noted that foreign brands leveraging the “de minimis” exemption — which allows goods valued under $800 to bypass customs duties and inspections — played a significant role in Forever 21's downfall. Despite U.S. efforts to curb the loophole, its continuation enabled budget-friendly overseas competitors to thrive, replacing Forever 21’s clearance racks with Shein coupons and Temu bundles.
For the time being, the brand’s physical stores and online sites will remain active as operations start winding down, and corporate starts seeking a last-minute bidder. Foss, however, described this white-knight fantasy as “unlikely.”
Ultimately, Forever 21's image didn't resonate with today's youth, who are looking to make their own unique styles. As Roger Beahm, a marketing professor at Wake Forest University, told The Los Angeles Times: “Forever 21 was the brand that the former generation used.”
