As CNBC reported, Forever 21 is expected to close all U.S. stores—including more than 350 locations—and has already started liquidation sales, though it's still open for bids from willing buyers. Over the past several months, the retailer has reportedly been in contact with over 200 potential bidders, with 30 signing confidentiality agreements, but no deal has been made.
"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, and evolving consumer trends," Chief Financial Officer Brad Sell said in a statement shared with NPR.
Stephen Coulombe, the operating company’s co-chief restructuring officer, said in a court filing that Forever 21 was “materially and negatively impacted” by online competitors Shein and Temu, which can ship inexpensive clothes and accessories straight to U.S. shoppers without import duties thanks to a tax loophole.
“Certain non-U.S. online retailers that compete with the Debtors, such as Temu and Shein, have taken advantage of this exemption and, therefore, have been able to pass significant savings onto consumers,” Coulombe wrote. “Consequently, retailers that must pay duties and tariffs to purchase product for their stores and warehouses in the United States, such as the Company, have been undercut.”
After Forever 21 filed for bankruptcy the first time in 2019, the retailer was purchased by Authentic Brands Group, a firm which buys and and overhauls poorly performing brands. Authentic Brands' CEO later called the move his "biggest mistake."
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