Forever 21 has filed for bankruptcy protection again as the U.S. sees a decline in customer traffic at malls and increased competition from online retailers such as Amazon, Temu and Shein.
F21 OpCo, the owner of Forever 21 stores, said it plans to suspend its U.S. operations under Chapter 11 bankruptcy protection until it determines whether it can continue to operate as a partner or sell some or all of its assets.
“While we considered every opportunity to optimize the company's future, we were unable to find a sustainable path forward due to competition from foreign fast fashion brands that took advantage of the de minimis exception to negatively impact our brand from a pricing and margin perspective,” CFO Brad Sell said in a statement.
The de minimis tax exemption allows goods valued at less than $800 to be imported into the country for U.S. businesses and consumers without paying taxes or duties.
Forever 21 stores in the U.S. will begin liquidation sales, while the website will continue to operate after the physical store closes.
The company's retail locations outside the U.S. are operated by other licensees and are not affected by the bankruptcy filing. International stores and websites will continue to operate as normal.
Authentic Brands Group owns the international intellectual property associated with the Forever 21 brand and may license the brand to other operators, F21 OpCo said.
Forever 21 first filed for bankruptcy protection in 2019. The brand was acquired by a consortium that included Authentic Brands Group and mall owners Simon Property Group and Brookfield Property Partners.
Forever 21 was founded in 1984 and, along with other fast-fashion chains like H&M and Zara, gained popularity among young people in the mid-1990s. However, Forever 21 continued to expand aggressively as shoppers began to move online.
Neil Saunders, managing director of GlobalData, said in a statement that part of the problem is that Forever 21 stores are too big for the business's current needs and are located in shopping centres with low customer traffic.
“Forever 21 has always been a debt-ridden retailer. In recent years, it has faced the dual challenges of a weak apparel market and fierce competition from low-cost Chinese marketplaces,” he said. “Both factors have undermined its position and eroded its market share.”
Sourse: breakingnews.ie
