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Forever 21’s operating company has filed for bankruptcy protection in the US, the BBC has reported.
The retailer confirmed in a statement that its stores and website in the states will keep trading as it “begins its process of winding down”.
However, the bankruptcy protection filing will not impact Forever 21’s international operations, which are managed by independent licensees.
This is the second time Forever 21 has filed for bankruptcy protection, having done so in 2019 before investors acquired the company through a joint venture.
While the retailer was once popular for its women’s fashion offering, in recent years it has struggled to stay on top of trends and has grappled with rising prices.
Brad Sell, CFO of Forever 21, said: “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.
“In the event of a successful sale, the Company may pivot away from a full wind-down of operations.”
It is understood that Forever 21 intends to conduct liquidation sales at its stores, while other assets would be sold in a court-supervised process.
A US company can reorganise its debts or sell parts of its business by postponing its obligations to creditors under Chapter 11 protection.
Founded in Los Angeles in 1984, Forever 21 had 800 stores globally at its peak in 2016, with 500 of those locations in the US.
Forever 21 has been approached for comment.
