Fast-Fashion Giant Faces Uncertain Future Amid Rising Costs and Competition
By João da Silva
Business Reporter, BBC News
A Once-Beloved Brand Struggles to Stay Afloat
Forever 21, once a dominant force in fast fashion, has filed for bankruptcy protection in the United States, marking another setback for the struggling retailer. The company confirmed that its US stores and website will remain operational as it begins the process of winding down.
The Challenges Behind Forever 21’s Downfall
Founded in Los Angeles in 1984 by South Korean immigrants, Forever 21 quickly gained popularity for its trendy and affordable clothing. At its peak in 2016, the brand operated 800 stores worldwide, with 500 in the US, competing with major fast-fashion players like Zara and H&M.
However, the retailer has struggled in recent years, facing multiple challenges:
- Shifting Consumer Preferences: The rise of e-commerce and the growing preference for sustainable fashion has reduced foot traffic to physical stores.
- Financial Struggles: The company initially filed for bankruptcy in 2019, but was later rescued by a group of investors in a joint venture.
- Intense Market Competition: Foreign fast-fashion companies have dominated the industry, making it harder for Forever 21 to maintain its market share.
- Rising Costs: Increased operating expenses and economic challenges have strained the company’s finances, making it difficult to remain profitable.
A Glimmer of Hope?
Despite its bankruptcy filing, Forever 21’s Chief Financial Officer, Brad Sell, remains open to alternative solutions. “We have been unable to find a sustainable path forward, given competition from foreign fast-fashion companies… as well as rising costs, economic challenges impacting our core customers,” he stated.
The company has announced plans for liquidation sales at its stores, with some or all of its assets expected to be sold through a court-supervised process. However, there remains a possibility that Forever 21 could avoid a complete shutdown if a successful sale is secured.
What’s Next for Forever 21?
Chapter 11 bankruptcy protection allows US companies to reorganize their debts or sell parts of their business. If Forever 21 can restructure successfully, it may still have a future—although its presence in the US retail landscape will likely never be the same.
Meanwhile, Forever 21’s international stores and online platforms, which operate under different license-holders, will not be affected by the bankruptcy filing.
The fall of Forever 21 serves as a cautionary tale for legacy retailers struggling to adapt to the rapidly changing fashion industry. Whether the brand can find a way to reinvent itself remains to be seen.
