Is Forever 21 Going Out of Business After Bankruptcy?

Forever 21 is a fast-fashion clothing store known for its trendy apparel and cheap prices.

In the past, high school and college students would flock to this affordable storefront to acquire the latest fashion pieces.

New tops could be purchased from the store for as little as $5 and the racks were always being rotated with new items that imitated the latest styles and trends.

The overwhelming success of the fast fashion industry made it seem like this clothing icon was doing well, but in reality, the changing times have been hard on Forever 21.

Why Forever 21 filed for bankruptcy

Forever 21 wasn’t just another clothing store located in the mall, it was a destination.

Most of the store’s locations could be found in enormous spaces usually occupying multiple levels, as an outlet store would.

The massive store space the apparel brand bought up was just one of the many problems that led to the business filing for bankruptcy.

In December 2020 Forever 21 joined Jamaicia James and others to raise $1 million for the Boys & Girls of America to help change and save lives (Credit: Forever 21)

The larger storefronts meant more clothing items were needed to fill the stores and the cost of the space itself was significant.

In the early 2000s, Forever 21 also expanded over the course of about five years from locations in seven different countries to storefronts in over 40 countries.

The rapid growth of the business was unsustainable as it focused more on expansion instead of the product supply chain and market interest.

The bigger the business became the slower the company was to hop on the latest trends and the quality of clothing also suffered.

A few main markets were also not well-researched before the stores were built, so customer interest was not as high as expected.

The shift toward online markets away from malls was another major factor in the downfall of Forever 21.

Up your shoe game with gorgeous Forever 21 high heels (Credit: Forever 21)

Services such as Amazon Prime and easy online shopping carts left many customers disinclined to venture into malls.

People don’t want to face the hassle of lines and crowded stores when they can order new clothes from the comfort of their own homes.

Suddenly, Forever 21 wasn’t just competing against other apparel brands located in the mall, the company also had to outmatch popular online retailers like Lulus and ASOS.

The final nail in the bankruptcy coffin for Forever 21 was the younger generation’s attention to the retail impact on the environment and fair labor.

The fast fashion industry is known for creating an immense amount of textile waste that damages the environment and reduces the world’s resources.

People are also becoming more conscious of the working conditions employed to create such cheap apparel, especially after the 2013 Bangladesh building collapse.

A Forever 21 model wearing a satin tie-front top with high-rise skinny jeans

At the time, a building housing several clothing factories collapsed killing more than 1,000 people.

Younger generations are looking for businesses with more ethical practices that treat their workers fairly and that have a better overall impact on the planet.

The combination of Forever 21 overextending itself, the shift to online markets, and the changing consumer preferences all led to the brand losing money at a rapid pace until it finally filed for bankruptcy in September of 2019.

The future of Forever 21

A lot of people assume filing for bankruptcy means the company is going out of business, but that’s not always the case.

While Forever 21 filed for Chapter 11 bankruptcy last year, the brand isn’t going anywhere quite yet.

Forever 21’s popular ribbed knit cardigans starting at $15

For now, it’s changing management and being restructured. In February of 2020, three companies acquired the retailer, and they plan to continue running the store once a few changes have been made.

The brand itself still has a lot of value as people recognize the name and its association with fashionable apparel.

However, to make the business more manageable the new owners plan to reduce the overall number of stores and downsize the remaining storefronts.

So far, the brand plans to close 178 U.S. store locations and will likely close a number of overseas locations, as well.

In addition, many of the remaining locations have too much floor space for a clothing brand, so these locations will likely see a move to more appropriate store sizes.

The new leaders are also looking to take advantage of their online store and do more promotions online through social media and other avenues.

All in all, it looks like Forever 21 will be sticking around at least a little bit longer.

The future of the company is still murky, but the change in leadership might be just what the brand needs to experience new life.