Forever 21 has filed for bankruptcy protection for the second time in six years, attributing its struggles to fast-fashion e-tailers Shein and Temu. The company’s U.S. operations are set to cease, with liquidation sales already underway at its 350+ locations. However, it remains open to potential buyers willing to take on its inventory and continue running the stores.
Despite reaching out to over 200 prospective bidders and securing confidentiality agreements with 30, no viable deal has emerged, according to court documents. The bankruptcy follows its first filing six years ago, which was followed by the Covid-19 pandemic, rising inflation, and fierce competition from Chinese-founded rivals like Shein and Temu.
Stephen Coulombe, co-chief restructuring officer, stated that Forever 21 was “materially and negatively impacted” by Shein and Temu exploiting a trade law loophole known as the de minimis exemption. This exemption allows goods valued under $800 to enter the U.S. without import duties, giving foreign competitors a significant pricing advantage.
While the company is headed for liquidation in the U.S., its international operations and website will continue. The brand, now owned by Authentic Brands Group, is not up for sale, and there’s ongoing interest from potential brand operators and digital experts. The brand’s intellectual property remains protected as plans for its future evolve.
vic CNBC