Forever 21’s US operator on Sunday filed for bankruptcy for the second time in six years and said it would wind down operations in the country, hurt by mounting online competition in the fast-fashion sector and weak mall traffic.
The company blamed the situation on higher costs and foreign companies taking advantage of duty-free treatment of low-cost packages from China to undermine its pricing power.
“We’ve 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,” said Brad Sell, finance chief at F21 OpCo that operates Forever 21’s roughly 350 US stores.
De minimis refers to the US waiver of standard customs procedures and tariffs on imported items worth less than $800 that are shipped to individuals and helps Chinese online retailers such as Shein and Temu to keep prices ultra-low.
Donald Trump paused his administration’s repeal of the clause as part of the fresh tariffs imposed on China in February.
Founded in Los Angeles in 1984 by South Korean immigrants, Forever 21 was popular among young shoppers on the prowl for stylish but affordable clothing. By 2016, it operated about 800 stores globally, of which 500 were in the US.
But, the rise of e-commerce retailers and the slow death of the American mega mall hurt apparel companies such as Forever 21 and Bonobos-parent Express, which filed for bankruptcy last…
