Forever 21 Files For Bankruptcy, Will Close 359 Stores
Another staple mall retailer is finding out that nothing lasts forever.
F21 OpCo, the owner of the Forever 21 U.S. brand license and operator of 359 stores across the U.S., filed for Chapter 11 bankruptcy protection in Delaware over the weekend while announcing its plan to shutter all of its locations.
The retailer was a pioneer in the fast fashion space before online marketplaces like Amazon, Shein and Temu exploded into the space. This is the brand’s second bankruptcy since 2020.
“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,” F21 OpCo CEO Brad Sell said in a statement.
Forever 21 will begin liquidation sales at its stores while simultaneously conducting a court-supervised sale of its assets, the company said. RCS Real Estate Advisors has been retained to market the brand’s leases to new tenants, the retail specialists announced Monday.
The 359 stores total 7.6M SF and range from 4K SF to 150K SF with an average size of 21K SF. The company’s bankruptcy was rumored to be in the works since last month.
“We're committed to helping Forever 21 maximize the value of these leases while providing retailers with access to premium locations at competitive lease terms,” Spence Mehl, a partner at RCS Real Estate Advisors, said in a statement.
RCS will market the properties through targeted outreach, with potential modifications to individual leases to bring in replacement tenants more likely than a portfolio deal, President and CEO Ivan Friedman said in an email to Bisnow. Bids for leases will be open for the next 30 to 60 days, he said.
F21 OpCo will simultaneously continue to hunt for a buyer to rescue the brand from being sold off for parts, the company said.
Sell said that Chinese firms’ use of the de minimis exemption, which allows imports under $800 to come into the country duty-free, made it impossible to compete. President Donald Trump tried to repeal the exemption in one of his early executive actions but backed off the plan as hundreds of thousands of packages piled up at customs control.
The exemption empowered foreign direct suppliers to undercut Forever 21’s pricing and margins at a time when the brand’s core customers were facing economic challenges, driving down sales, Sell said.
Forever 21’s locations outside the U.S. are not operated by F21 OpCo and aren't subject to the Chapter 11 filing. Authentic Brands Group, a brand management firm that grows through mergers and acquisitions, maintains control of the Forever 21 brand.
Authentic Brands Group partnered with Simon Property Group and Brookfield Property Partners in 2020 to buy Forever 21 out of bankruptcy. Brookfield sold its stake the following year while Simon Property Group cut its stake in Authentic Brands Group last year.
Forever 21 had roughly 500 stores in the U.S. when it went bankrupt the first time. It was bought for $81M after no other investors offered more than a stalking horse bid for the company.
