What: Forever 21's operator files for second bankruptcy in five years with up to $5 billion in liabilities, marking another setback for the pioneering fast fashion retailer amid digital competition.

Why it is important: The filing highlights the ongoing transformation of traditional retail, where historical success and scale (over $4 billion in annual sales) no longer guarantee survival without successful adaptation to changing consumer preferences.

Forever 21's operator, F21 OpCo, has filed for Chapter 11 bankruptcy protection in Delaware, marking its second such filing since 2019. The company's financial situation is particularly challenging, with estimated assets between $100 million and $500 million against liabilities ranging from $1 billion to $5 billion. This development represents a dramatic decline for a retailer that once dominated the fast fashion landscape in the United States.

The company's journey from its early 2000s success, when it achieved over $4 billion in annual sales and employed more than 43,000 people worldwide, to its current struggles illustrates the volatile nature of retail fashion. Forever 21's business model, which focused on rapidly produced, trend-inspired clothing at low prices, helped popularise fast fashion in the United States but has struggled to compete with the rise of online retailers and changing consumer preferences.

IADS Notes: Forever 21's second bankruptcy filing in five years reflects broader challenges in the fast fashion sector and retail consolidation trends. As reported in January 2025, parent company SPARC Group's formation of Catalyst Brands highlighted ongoing struggles with Forever 21's performance, leading to considerations of potential sale or closure. This development followed November 2024's observations of the brand's underperformance within Simon Property Group's portfolio, particularly impacting lower-income consumers amid cautious spending patterns. The situation marks a significant shift from September 2023's strategic partnership with Shein, which aimed to combine Forever 21's physical retail network with Shein's digital capabilities and younger customer base. The current bankruptcy, with liabilities between $1-5 billion far exceeding estimated assets of $100-500 million, demonstrates how rapidly changing consumer preferences and digital competition can challenge even established retailers that previously achieved annual sales of $4 billion and employed 43,000 people worldwide.

Forever 21 operator files for bankruptcy