Forever 21 Declares Bankruptcy Again: What Went Wrong?

The once-iconic fast-fashion brand is closing its U.S. stores as it struggles to keep up with online competition.

The brand has struggled to contend with rising costs and increased competition from online retailers like Shein and Temu. (Shutterstock)

Forever 21 Files for Bankruptcy Again – What Went Wrong?

If you grew up shopping at Forever 21, this might sting a little— the brand just filed for bankruptcy again and is shutting down its U.S. stores. So, what happened? Basically, rising costs, fewer people shopping in malls, and crazy competition from online retailers like Shein and Temu made it hard for Forever 21 to keep up.

A Struggle to Stay Afloat

Forever 21 has been on a rollercoaster over the years. After its first bankruptcy in 2019, the company was bought by a group including Authentic Brands Group (ABG) and mall owners. They tried to turn things around, even teaming up with Shein in 2023 to sell their clothes on Shein’s site and offer in-store returns. But it wasn’t enough.

Now, under Chapter 11 bankruptcy protection, Forever 21 is shutting down in the U.S. and figuring out if it can sell off assets or work with a partner to stay alive in some form.

The Rise of Online Rivals

One of Forever 21’s biggest problems? Shein and Temu. These sites pump out trendy clothes fast and sell them for even cheaper than Forever 21 ever could. For example, while Forever 21 sells a basic T-shirt for around $10, Temu has it for $5.

And thanks to a loophole called the de minimis exemption, these foreign brands can ship products under $800 to U.S. shoppers without paying taxes or duties—something Forever 21 doesn’t have the luxury of doing.

The Mall Problem

Another major issue? Forever 21 still relies heavily on malls, and foot traffic has been way down. Plus, many of their stores are just too big for today’s retail needs. Online shopping has exploded, and Forever 21 was a little too late to the game.

What’s Next for Forever 21?

The brand isn’t disappearing entirely—stores outside the U.S. (run by other licensees) will stay open, and ABG might license the brand to new operators.

Forever 21’s downfall is just one of many retail struggles lately. Joann Fabrics, Party City, and brands like Quiksilver and Billabong have also filed for bankruptcy. With rising costs and shifts in shopping habits, it’s a tough time for traditional retailers.

For now, if you’re a Forever 21 fan, you might want to hit up their liquidation sales before it’s too late.