Forever 21, the once-iconic fast-fashion retailer, has filed for Chapter 11 bankruptcy for the second time in just six years, following a long period of dwindling sales exacerbated by increased competition from online giants like Shein and Temu. As part of the bankruptcy proceedings, the company will implement an “orderly wind-down” of its U.S. operations, seeking buyers for its assets while continuing to run its stores and website during the liquidation process.

The filing, which took place on March 16, indicates that Forever 21 has between $100 million and $500 million in assets alongside liabilities estimated to be between $1 billion and $10 billion. The operating company, F21 OpCo, must navigate the challenges posed by substantial competition from overseas brands that often benefit from a tax loophole known as de minimis, which allows for duty-free imports of goods valued under $800. This regulatory advantage has made it increasingly difficult for Forever 21 to compete effectively.

Brad Sell, CFO of Forever 21, expressed the company’s struggle to find a sustainable path forward amid rising costs and consumer expectations shifting towards more affordable online options. Sell noted that the financial landscape has changed dramatically, stating, “While we have evaluated all options to best position the Company for the future, we have been unable to find a sustainable path forward.”

Founded in 1984 by South Korean immigrants Do Won Chang and Jin Sook Chang, Forever 21 once boasted around 800 stores globally at its peak in 2016. The brand struggled through its first bankruptcy in 2019, which led to a buyout by a consortium that included Authentic Brands Group, Simon Property Group, and Brookfield Property Partners. Authentic Brands now retains ownership of Forever 21’s trademark and intellectual property, with CEO Jamie Salter admitting last year that acquiring the retailer was “the biggest mistake” for his company.

Despite efforts to remain relevant and adapt to current market demands, Forever 21's attempts to incorporate online sales partnerships have not yielded the desired results. The company announced that all U.S. stores will close, but its website and international locations will continue to operate unaffected.

While the bankruptcy filing signals a significant change in the retail landscape, particularly for brick-and-mortar fast fashion brands, Forever 21's legacy as a leader in making trendy clothing accessible to young shoppers still holds a poignant place in American culture. As the brand embarks on liquidation sales in the coming weeks, it remains to be seen whether its trademark will endure through other operators or succumb to the pressures of an ever-evolving retail climate.

For further details, visit the original articles from BBC, Reuters, and Forbes.