[Update as of March 17, 2025] The operating company that runs Forever 21’s U.S. business (F21 OpCo) has filed for Chapter 11 bankruptcy and is beginning a wind-down of its business while it looks to sell some or all of its assets. The process will not impact the Forever 21 IP, which was acquired by brand management firm Authentic Brands Group after the retailer’s first bankruptcy in 2019. Following the conclusion of this bankruptcy, Authentic will be able to license the brand to other operators if it chooses. The U.S. bankruptcy also will not impact any stores located in other countries or international ecommerce sites, all of which are operated by other licensees.
RCS Real Estate Advisors has been retained to market and sell Forever 21’s lease portfolio, which includes 359 stores totaling 7.6 million square feet with store sizes ranging from 4,000 to 150,000 square feet. All stores and the Forever 21 website will remain operational as the company begins liquidation sales, a process that might be halted if a buyer is found. Forever 21 explained in a statement that it “believes this dual-path process will best maximize optionality and value.”
“While we have evaluated all options to best position the company for the future, we have been unable to find a sustainable path forward, given competition from foreign fast fashion companies, which have been able to take advantage of the de minimis exemption to undercut our brand on pricing and margin, as well as rising costs, economic challenges impacting our core customers and evolving consumer trends,” said Brad Sell, CFO of F21 OpCo in a statement.
[Update as of March 4, 2025] Struggling retailer Forever 21 will close its Los Angeles headquarters and lay off 358 employees, according to the Los Angeles Times and multiple additional media outlets. The planned closing of Forever 21’s HQ was revealed by a letter sent to the California Employment Development Department.
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Original story from Feb. 24, 2025 begins –
The U.S.-based operator of Forever 21 is preparing to close at least 200 of its approximately 350 stores in preparation for a potential bankruptcy, Bloomberg reports, citing people with knowledge of the matter.
The news follows rumblings last week that the retailer was struggling to maintain its sprawling brick-and-mortar presence amid increased competition in the fast fashion sector. While a bankruptcy filing isn’t certain to happen, its goal would be to find a buyer for Forever 21’s remaining U.S. stores, reports Bloomberg. If a buyer is not found, a chainwide liquidation is in the cards.
Forever 21’s Twisting Tale of Bankruptcies and Sales
Forever 21’s intellectual property has been owned by brand management firm Authentic Brands Group since its first bankruptcy in 2019, and a second bankruptcy would not disrupt that arrangement. In the U.S., the brand is operated by the company formerly known as SPARC Group, which became Catalyst Brands in January 2025 after it merged with JCPenney. Catalyst owns the operating company that runs Forever 21’s U.S. business under a licensing agreement with Authentic, and that is the entity that could potentially enter bankruptcy as soon as next month, according to Bloomberg.
Perhaps the first sign of fresh trouble at the beleaguered fast fashion chain was the December 2024 departure of CEO Winnie Park, who had been at the helm since 2022 and left to lead Five Below. During her tenure she made a concerted effort to refresh the brand with a focus on younger consumers and enhanced omnichannel capabilities.
In a bid to stave off new competition, the company entered a partnership with one of its biggest competitors — Chinese-based online fast fashion brand Shein — in 2023. The joint venture saw Shein acquire an approximately one-third interest in SPARC Group, with SPARC becoming a minority shareholder in Shein. A co-branded fashion line and a new service to accept Shein returns at Forever 21 stores followed, but they evidently haven’t been enough to bolster the Forever 21 business.
