【Epoch Times March 17, 2025】 Forever 21, the American fast fashion brand, has filed for bankruptcy for the second time in six years on Sunday, March 16, and announced that it will completely withdraw from the U.S. market. The company has been facing increasing competition from low-priced fast fashion products from China, leading to mounting operational pressures and eventually deciding to shut down its U.S. operations.
According to Reuters, the company attributed its bankruptcy to rising costs, while foreign companies have been utilizing the U.S. de minimis exemption policy for low-priced packages from China to weaken its price competitiveness.
Brad Sell, the CFO of F21 OpCo, the parent company of Forever 21, stated, “Due to foreign fast fashion brands being able to leverage the ‘lowest duty-free amount’ policy to lower prices and profits, we have been unable to find a sustainable path for development.”
The “lowest duty-free amount” (commonly known as small packages) refers to the U.S. policy that exempts imported goods valued at less than $800 from standard customs procedures and duties. This policy has allowed Chinese e-commerce platforms such as Shein and Temu to maintain extremely low prices and gain a competitive advantage in the U.S. market.
U.S. President Donald Trump previously announced new tariffs on Chinese goods in February but suspended plans to abolish that provision.
Founded by a Korean immigrant in Los Angeles in 1984, Forever 21 specializes in affordable fashion and was once popular among young consumers. By 2016, the brand had about 800 stores globally, with around 500 in the U.S.
However, with the influx of Chinese e-commerce companies dominating the market through pricing strategies, Forever 21 and other fashion brands like the parent company of Bonobos, Express, suffered heavy losses. Express also filed for bankruptcy last year.
Sarah Foss, the legal and restructuring director of Debtwire, a debt data analysis firm, stated, “Entities in highly competitive retail markets like Forever 21 are facing increasing operational costs due to inflation, making survival more challenging.”
According to Debtwire data, since early 2024, 20 companies in the retail sector have filed for bankruptcy. Since 2016, 25 retail chain companies have undergone at least two bankruptcies.
F21 OpCo plans to conduct liquidation discount sales in its U.S. stores while initiating asset sales and market restructuring processes under court supervision. The company estimates its assets to be valued between $100 million and $500 million.
During this process, U.S. stores and the official website will continue operations, with no impact on international markets.
According to documents filed with the Delaware bankruptcy court in the U.S., Forever 21’s current debt ranges from $1 billion to $10 billion.
Forever 21 filed for bankruptcy in 2019 and was later acquired by Sparc Group, a group formed by Authentic Brands Group (ABG) and shopping mall operators Simon Property and Brookfield Asset Management.
Currently, Catalyst Brands holds Forever 21, which was formed through the merger of Sparc Group and department store chain JC Penney on January 8, 2024. Catalyst Brands initially planned to find a transformation solution for Forever 21 but ultimately was unsuccessful.