Forever 21 has filed for bankruptcy for the second time in six years, and is set to embark on the “orderly wind down” of its U.S. retail operations.
Operating company F21 OpCo announced Monday it had filed for Chapter 11 protection and has entered into a support plan with its lenders.
Its remaining stores will stay open for now, with liquidation sales set to be launched as it goes through a process for the sale of some or all of its assets.
Barring a late rescue from a new owner, it looks like it’ll mean the closure of its one remaining Minnesota location, at the Apache Mall in Rochester.
Forever 21 had four outlets in the state as recently as 2019, with other stores in addition to Rochester found at the Mall of America, the Shoppes at Arbor Lakes in Maple Grove, and Rosedale Center in Roseville.
The Mall of America location was the most recent store to close. It opened in 2012 in the 80,000 sq. ft. space formerly occupied by Bloomingdales, but held a closing down sale in December.
The Forever 21 in the Mall of America, which closed late last year.
Forever 21 inside Mall of America. Photo by Christine Schuster | Bring Me The News.
Forever 21 filed for bankruptcy in 2019 before it was rescued by the current ownership group in 2020.
In announcing the latest bankruptcy, F21 OpCo CFO Brad Sell blamed competition from “foreign fast fashion companies” for the shutdown, which CNBC reports is believed to be referring to cut-price, fast-fashion retailers such as China-based Temu and Singapore-based Shein.
“Following the conclusion of our strategic review and after careful deliberation, we made the decision to file for chapter 11 to implement a court-supervised marketing process to solicit a going concern transaction, and, in the absence of such an arrangement, an orderly wind down of operations,” he said,
“While we have evaluated all options to best position the Company for the future, we have been unable to find a sustainable path forward, given competition from foreign fast fashion companies, which have been able to take advantage of the de minimis exemption to undercut our brand on pricing and margin, as well as rising costs, economic challenges impacting our core customers, and evolving consumer trends,” he continues.
“As we move through the process, we will work diligently to minimize the impact on our employees, customers, vendors and other stakeholders.”
The de minimis exemption is a bipartisan tax exemption passed by Congress that allows imports to the U.S. valued at under $800 per person, per day, to enter the country free of duty and taxes.
