Brands with mall stores once ruled the retail scene, back when teens hung out in the food court, using their flip phones to call their parents for a ride. For this demographic, one of the most exciting stores was Forever 21. You could grab a cute little dress for under $20 or funky earrings for under $10. And there was just so much to choose from, all on-trend and dirt cheap. Sadly, though, this shopping rush has been replaced by digital retailers like Amazon, Shein, and Temu—and it's affected Forever 21 to the point that the company is planning to file for bankruptcy, which could mean they'll have to close all 350 remaining U.S. stores.
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Forever 21 will close at least 200 more locations, possibly all 350.
A Feb. 19 report from Bloomberg states that people familiar with the matter say Forever 21 is planning to close at least 200 more locations as part of a Chapter 11 bankruptcy process that's slated to kick off in March.
Forever 21 is owned by Catalyst Brands, a company that was recently created when Sparc Group (owner of other former mall mainstays including Aéropostale, Eddie Bauer, Brooks Brothers, Lucky Brand, and Nautica) acquired and merged with JCPenney.
In an email to Bloomberg, a Catalyst spokesperson said, "Forever 21’s operating company, which is the brand licensee in the US, continues to explore strategic options, including a potential sale, while also reducing costs and optimizing its store footprint. The efforts are ongoing and no final decisions regarding the outcome of the process have been made."
If a qualified buyer doesn't come forward, Forever 21 may be forced to liquidate its remaining 350 U.S. stores, the anonymous source told Bloomberg.
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This isn't Forever 21's first bankruptcy filing.
As Forbes recounts, Forever 21 was founded in 1984 in Los Angeles by a South Korean couple. A pioneer in the fast-fashion space, the company took a gamble on vacant mall spaces, hoping it could become the new equivalent of the department store.
"Its store count boomed from 500 stores in 2010 to 800 in 2018 as it expanded to over 40 countries at its peak," notes Forbes. However, the aggressive expansion backfired, and in 2020, Forever 21 emerged from its first bankruptcy with a trio of new owners that eventually became Catalyst Brands.
In Aug. 2023, the retailer partnered with Chinese digital retailer Shein and began selling its merchandise on their website. However, earlier this month, a company spokesperson described the partnership as "good but not great," according to Forbes.
The current bankruptcy plans include finding a buyer for Forever 21's "profitable leases," Bloomberg states, which is about 150 stores.
"Some of the stores slated to close have lost money for years, according to some of the people familiar with the plans," Bloomberg shares. "Forever 21 has often withheld royalties and rent payments elsewhere in order to keep them afloat, one of the people said."
Best Life has reached out to Catalyst Brands for further information on its plans and will update this story when we hear back.
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Catalyst recently did an about-face with JCPenney.
If Catalyst's recent outcomes are any indication, store closures may definitely be on the horizon for Forever 21.
After acquiring JCPenny in January, the company said it had no plans to close any of the department stores. However, just last week, JCPenney confirmed to Axios that it would close at least eight of its 650+ U.S. stores.
"While we do not have plans to significantly reduce our store count, we expect a handful of JCPenney stores to close by mid-year," a company spokesperson said in a statement to Axios.
They clarified that the decision was "unrelated to the recent Catalyst Brands merger," adding, "isolated closures do happen from time to time due to expiring lease agreements, market changes or other factors."
