Forever 21 files for bankruptcy for second time in 6 years, brand to conduct liquidation sales

US-origin Fashion brand, Forever 21’s operator F21OpCo filed for Chapter 11 bankruptcy on Sunday. This is the second time in six years the retailer has taken the decision amidst withering sales. As Forever 21 fails to remain profitable, the company said the liquidation sales at their stores will soon follow.

In the ever-increasing e-commerce market, brands with little to no online presence struggle to make the cut. Diminishing revenues and minimal footfall has led Forever 21 to this state the second time. Moreover, a court-supervised sale and marketing process for some or all of its assets is also in the foreseeable future.

Being unable to find a buyer for its 350 stores across the US, F21OpCo’s CFO, Brad Sell, expressed that being unable to find a sustainable path forward they took this decision. Moreover, due to competition from “international fast-fashion companies”, like Shien and Temu, which have undercut Forever 21 on pricing and cost have impacted their core customer base.

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Forever 21‘s assets are worth a between the range of $100 million to $500 million. However, according the filing with bankruptcy court in the Delaware District, liabilities exceed their assets going as high as $5 billion.

After a prolonged period of poor performance, the brand has landed in this situation again since 2019. Previously, it was bought out of bankruptcy by Sparc, Simon Property and Brookfield Asset Management. Although this year, Sparc announced the inclusion of JCPenney to form Catalyst Brands to explore “strategic options” for Forever 21.

The company announced that its website and U.S. stores will stay open, ensuring uninterrupted service for customers, while international locations remain unaffected. On the other hand, in case of a successful sale, Forever 21 can pivot away from a full wind down of operations.

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