Why is Forever 21 filing for bankruptcy? Reasons explained as brand shuts down U.S Stores

Forever 21 has filed for bankruptcy and may be out of business in the United States soon. The retail company, known for being the shopping haven for teenage girls in the United States in the early 2000s, filed for Chapter 11 bankruptcy.

In a statement released on March 16, 2025, the company announced that it had created a Plan Support Agreement with some of its U.S. subsidiaries to make it easy for the company to conduct liquidation sales alongside a court-supervised sale for the company and its assets.

According to Forbes, Brad Sell, Chief Financial Officer of the company, revealed that the clothing company filed for bankruptcy because it couldn’t keep up with fierce competition from fast fashion companies like SHEIN and Temu. In addition, the company lost its allure to customers as it faced challenges with evolving fashion trends.

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Forever 21 initially filed for bankruptcy in 2019 and shut down 200 stores

According to CNN, the clothing company filed for Chapter 11 bankruptcy in 2019 and, as a result, closed more than 100 stores. Linda Cheng, Executive Vice President at Forever 21, described the first filing as:

"An important and necessary step to secure the future of our Company, which will enable us to reorganize our business and reposition Forever 21.”

Some months after the retail company filed for bankruptcy, Simon Property Group, Authentic Brands Group, and Brookfield Properties acquired Forever 21 for $18 million.

A statement from the company read:

"Once approved, the agreement will allow Forever 21 to come out of bankruptcy, keeping its headquarters, stores, and e-commerce operations open, providing fashions and trends that customers know and love for years to come."

It would seem that Forever 21 is back to its financial woes again as sales have dwindled and its brand presence further diminished. Neil Saunders, a retail analyst at GlobalData Retail, stated that Forever 21 was also to blame for its current state as the company failed to rebrand and come up with a marketing strategy:

"Forever 21 has not helped itself through these challenges: merchandising and the assortment have been lackluster, and the brand has lacked any clear point of view for a long time,”

Saunders added:

"The net result is that more and more customers, especially those at the younger end of the market, have abandoned it."

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Other retail chains closing their stores in 2025 include Family Dollar, CVS and Walgreens, Big Lots, and LL Flooring.