A formerly popular clothing brand that was once ubiquitous in shopping centers throughout America has
submitted for its second bankruptcy in half a decade
.

The US operations of Forever 21 have faced challenges as mall footfall decreases and competition from online giants such as Amazon, Temu, and Shein grows more intense.

F21 OpCo announced late Sunday that it plans to conclude operations in the US under Chapter 11 bankruptcy protection.

All 200 US stores are set to close down unless a buyer intervenes at the final hour. Management is preparing for liquidation sales, allowing customers to take advantage of discounts as inventory gets cleared out.

However, Forever 21 will continue to operate as the parent company intends to transform it into an exclusively online business within the United States. Stores abroad remain unaffected.

During its prime, Forever 21 — the beloved destination for American teens for many years — operated over 500 outlets within the U.S. and had more than 800 locations worldwide. The company was established in Los Angeles in 1984 by immigrants from South Korea.

Retail analyst Neil Saunders informed Farovint that ‘ Forever 21 has faced significant challenges due to the emergence of Shein and somewhatTemu.’

It has also encountered rivalry from other retail giants such as Zara, Uniqlo, and more. Essentially, the benchmark for quick fashion has become much tougher, and Forever 21 has struggled to meet this elevated standard.

The reality is that Forever 21 has lost all distinctiveness. Its large stores are excessively spacious for their requirements and brim with merchandise lacking character and uniqueness.

It was not until 2019 that the franchise expanded.
last filed for bankruptcy
.Below that, it closed numerous stores but resurfaced in 2020 under new ownership.

F21 OpCo criticized firms exploiting the tax-exempt status of inexpensive Chinese bundles to weaken its ability to set prices.

“We haven’t been able to identify a viable way forward due to intense competition from international fast-fashion retailers who benefit from the de minimis exemption, allowing them to offer lower prices and margins than us,” stated Brad Sell, CFO of F21 OpCo, which manages approximately 350 Forever 21 outlets across the United States.

De minimis pertains to the U.S. exemption from regular customs processes and duties for imported goods valued at under $800, which aids individual recipients. This policy supports low-cost offerings from Chinese e-tailers like Shein and Temu.

F21 OpCo has been granted permission to operate under the Forever 21 name by Authentic Brands, a company based in New York that also holds rights to brands such as Reebok, Champion, Ted Baker, and Brooks Brothers. Authentic intends to maintain the presence of the Forever 21 brand online.

Jarrod Weber, who serves as the global president of lifestyle at Authentic, stated: “Forever 21 stands out as one of the most identifiable brands in the realm of fast fashion. As a globally recognized label originating from the United States, Forever 21 has an impressive journey still awaiting it.”

Retail is evolving, and similar to numerous brands, Forever 21 is adjusting to strike the appropriate equilibrium among physical stores, online commerce, and wholesale channels.

‘The restructuring of our US licensee’s operations will not affect Forever 21’s intellectual property or its global ventures.’

This offers a chance to speed up the modernization of the brand’s distribution strategy, positioning it to thrive and dominate in the quick-fashion sector for many years ahead.

We’re developing a streamlined from-creation-to-rack approach that expedites processes. This will quicken production timelines and provide top-quality items at competitive prices.

We’re seeing significant interest from prominent brand managers and digital specialists who align with our vision and are prepared to elevate the brand to new heights.

This licensing approach has grown more prevalent as firms buy up recognized yet financially troubled retail entities and then lease these brand names to outside businesses.

Authentic purchased Forever 21 in 2020 following its initial phase.
bankruptcy
, which witnessed hundreds of stores closing their doors.

Last January, Jamie Salter, the CEO of Authentic, stated that the deal was likely “the biggest error” of his professional life.

He mentioned that he couldn’t view Shein and Temu as significant rivals until he realized the extent of their threat, at which point the harm had already been inflicted.

In 2015, at its height, Forever 21 had a valuation of $6 billion, which made the extremely affluent South Korean spouses who founded it, Do Won Chang and Jin Sook Chang, incredibly rich.

Indications of an issue emerged last summer when
Forever 21 requested lease cuts from property owners.
up to 50 percent in certain areas.

This statement follows as U.S. retailers speed up their store closings.

Scores of enormous chains—including
Macy’s
,
Party City
, and
Big Lots
— initiated numerous store closings over the last 12 months due to shifting consumer preferences.

A recent study has shown that retailers throughout America are
anticipated to speed up shop closings
Up to 15,000 shut down locations this year. Just over 7,300 stores closed their doors last year.

Read more