Fast-fashion retailer Forever 21 files for bankruptcy
Shoppers enter a Forever 21 fashion retail store at the King of Prussia mall in King of Prussia, Pennsylvania, US on Sep 30, 2019. (File photo: Reuters/Mark Makela)
Fast-fashion retailer Forever 21's United States operating company on Sunday (Mar 16) 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 likely means liquidation for the company, which was unable to find a buyer for its roughly 350 US stores. Its 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, paired with the slow death of the American mega mall, has been an ongoing headwind for Forever 21. It previously filed for Chapter 11 in 2019 and was bought out of bankruptcy by Sparc, a joint venture between label owner Authentic Brands Group and mall operators Simon Property and Brookfield Asset Management Inc.
Forever 21 said it will conduct liquidation sales at its stores while simultaneously conducting a court-supervised sale and marketing process for some or all of its assets.
The company listed its estimated assets in the range of US$100 million to US$500 million, according to a filing with the bankruptcy court in the District of Delaware, with liabilities being in the range of US$1 billion to US$10 billion. The filing also showed creditors in the range of 10,001 to 25,000.
In the event of a successful sale, Forever 21 said it may pivot away from a full wind-down of operations to facilitate a going-concern transaction.
The company said its stores and website in the US will remain open and continue serving customers, and that its international stores remain unaffected.
Forever 21 is owned by Catalyst Brands, an entity formed on Jan 8 through the merger of Forever 21's previous owner, Sparc Group, and JC Penney, a department store chain owned since 2020 by mall operators and Simon Property Group.
When Catalyst Brands was formed, it said in a statement that it was "exploring strategic options" for Forever 21.
Authentic Brands will continue to own Forever 21's trademark and intellectual property, which could live on in some form. Authentic Brands CEO Jamie Salter last year called acquiring Forever 21 "the biggest mistake I made".
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 US.
