Fast-fashion retailer Forever 21’s U.S. operating company on Sunday filed for Chapter 11 bankruptcy for the second time in six years, hamstrung by dwindling mall traffic and mounting competition from online retailers.
The move means liquidation for the company, named F21 OpCo, which was unable to find a buyer for its roughly 350 U.S. stores. Forever 21’s trademark and intellectual property – still held by an entity called Authentic Brands Group – may live on in a different form.
The rise of e-commerce players such as Amazon as well as Shein and Temu, paired with the slow death of the American mega mall, have hurt apparel retailers such as Forever 21 and Bonobos-parent Express, which filed for bankruptcy last year.
Founded in Los Angeles in 1984 by South Korean immigrants, Forever 21 at its height was popular among young shoppers on the prowl for stylish but affordable clothing. By 2016 it was operating around 800 stores globally, with 500 of those in the United States.
“We have been unable to find a sustainable path forward, given competition from foreign fast fashion companies, which have been able to take advantage of the de minimis exemption to undercut our brand on pricing and margin, as well as rising costs, economic challenges impacting our core customers, and evolving consumer trends,” said Brad Sell, F21 OpCo’s chief financial officer.
De minimis refers to the U.S. waiver of standard customs procedures and tariffs on imported items worth less than $800 that are shipped to individuals.
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