Forever 21—the iconic brand that once defined fast fashion in the U.S.—has officially filed for bankruptcy. The privately-owned retail giant plans to shut down operations in Canada, Japan, and 38 other countries, along with closing approximately 178 stores across the U.S.
This marks a significant setback for a company that once embodied the American dream.
The filing reflects more than just a corporate stumble—it highlights a broader shift in consumer shopping habits and the declining appeal of traditional shopping malls. It also underscores a growing divide: while lower-tier malls are struggling to retain customers and tenants, high-performing malls continue to thrive with strong foot traffic and retail activity.
Why Forever 21 Suffered Such a Mauling?
According to Linda Chang, Executive Vice President of Forever 21, one of the key missteps in the brand’s decline was expanding too fast, too soon. “We went from seven countries to 47 in under six years,” she said, acknowledging that the rapid international growth added complexity—especially at a time when the retail landscape was shifting dramatically. Malls were losing foot traffic, and consumers were increasingly turning to online shopping.
Forever 21’s rise was powered by an aggressive expansion strategy, especially in the years surrounding the Great Recession. The belief then was: bigger is better. The company poured massive investments into building large-scale stores designed not only for sales but also to function as powerful marketing tools.
However, while the brand was originally aimed at teens and young women, Forever 21 made a bold—and costly—move to reposition itself as a family retailer. This led to the launch of giant flagship stores in major cities, including its iconic 90,000-square-foot, four-story space in New York’s Times Square. The company also took over spaces vacated by bankrupt chains like Gottschalks and Mervyn’s.
But rapid growth and underestimating the online shift weren’t the only problems. Forever 21 also stretched itself thin with product diversification. In 2014, it launched F21 Red, aiming to offer ultra-low prices—$1.90 for camisoles and $7.90 for jeans—which ultimately hurt margins.
The numbers tell a clear story. E-commerce made up just 16% of total sales, and revenue plummeted from $4.4 billion in 2016 to $3.3 billion in 2018. Employee count also dropped from 43,000 to 32,800 during that period. Now, with restructuring underway, Forever 21 is aiming to scale back and stabilize with a more focused goal: reaching $2.5 billion in annual sales.
What does Forever 21 Decline mean?
Forever 21’s insolvency has raised some grave questions around factors that are affecting retail performance, especially fast fashion. The industry has been under fire for the past many years owing to the environmental impact of disposable clothing and concerns surrounding workers’ payment and safety.
Most importantly, the debacle points out young buyers are increasingly turning towards brands and goods that claim sustainability, says Wendy Liebmann, the CEO at WSL Strategic Retail.
Liebmann thinks Forever 21 presumed demand for fast fashion will continue to grow the same way as it had in the past and they just need to have their stores in the right locations. But this idea didn’t appeal to the current shoppers.
What’s Going to Happen with Forever 21?
Forever 21 enjoyed massive success in the early 2000s as the majority of its merchandise was an imitation of leading designer styles, and the company made them available at incredibly low prices. In fact, the retail chain joined hands with prominent brands like H&M and Zara to make disposable clothing widely available to US buyers, particularly young women as they were more inclined to new wares.
But at present, Forever 21 is in talks with the landlords of its stores to chart out the future action plan as it hasn’t paid the rent in September to preserve capital. The company believes it can rehash the leases on its US stores once they file the bankruptcy.
Though men’s and girl’s merchandise still looks promising to Ms. Chang, going forward they will drop the idea of selling cosmetics, home décor, and electronics.
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