Forever 21 Struggles to Stay Afloat

If retail had a Hall of Fame for fast comebacks and faster downfalls, Forever 21 would be a shoo-in. Bloomberg reports that the fast-fashion giant is once again flirting with Chapter 11 bankruptcy, just five years after its first filing in 2019. With mall traffic shrinking and online rivals eating its lunch, the fashion giant is desperately looking to offload profitable leases but if those deals don’t happen, another trip to bankruptcy court could be next.

Flashback to the fashion giant’s First Fall

Forever 21 was once the kingpin of fast fashion, but 2019’s Chapter 11 bankruptcy was a wake-up call. The retailer overexpanded, signed sky-high leases, and missed the e-commerce memo, leading to store closures and a desperate search for salvation. That lifeline came in 2020, when Simon Property Group, Brookfield Property Partners, and Authentic Brands Group (ABG) elevated the brand to $81 million. The plan? A grand revival. The reality? A slow-motion struggle.

Same Story, Different Year

Fast forward to 2025, and Forever 21 is once again on the ropes. The company has tapped restructuring firm BRG to explore options, but its biggest headache remains fierce competition from online disruptors like Shein and Temu. Consumers who once flocked to the fashion giant for cheap, trendy clothes now swipe their screens instead of their credit cards in-store.

Financial Scorecard:

• 2015: Peak revenue of $4.4 billion
• 2018: Declines to $3.3 billion
• 2019: Sales tank 32%, prompting bankruptcy
• 2022: Online revenue for Forever21.in at $9.5 million
• 2025: The financial outlook? Not so fabulous

Even ABG CEO Jamie Salter, the man who once bet big on Forever 21, now calls it "probably the biggest mistake I made." With hindsight being 20/20, he’s trying to course-correct by partnering with Shein but so far, the results are a mixed bag. Shein pop-ups and return services have boosted foot traffic in the fashion giant’s stores, but profits remain elusive.

From Fashion Giant to Retail Warning

The fashion store’s struggles aren’t a random stroke of bad luck; they’re self-inflicted wounds mixed with a changing retail scenario:

• Too Many Big-Box Stores: Rent at prime mall locations became a crushing expense, prompting Forever 21 to ask landlords for up to 50% rent cuts, according to Bloomberg.
• Slow to Catch the Online Wave: While Shein perfected its digital-first empire, Forever 21 stumbled with e-commerce, failing to match the speed of online competitors.
• Vendors Left Hanging: Reports from CNBC indicate Forever 21 has been paying vendors late, with some bills more than 70 days past due—a telltale sign of financial distress.
• Brand Fatigue: Once the go-to for trendy, budget-friendly fashion, the American go-to-store fell out of favor with Gen Z, who prioritize sustainability and fashion that doesn’t feel disposable.

Competitors Who Cracked the Code

While Forever 21 is stuck in retail limbo, other fast-fashion brands are thriving by playing it smart:

• H&M: Betting on sustainability and digital integration to stay ahead.
• Zara (Inditex): Mastering an ultra-efficient supply chain, getting trends from design to store in weeks.
• Shein: Raking in $30 billion annually thanks to fast, cheap, and AI-driven fashion production.
• Reebok (ABG’s Other Bet): Unlike Forever 21, Reebok saw sales skyrocket 213% post-acquisition, proving some brand turnarounds work.

While Forever 21 remained stuck in an outdated model, its rivals embraced technology, streamlined logistics, and understood what today’s shoppers want and that has made all the difference.

The Lifeline for the Fashion Giant

According to Bloomberg, the retailer has three possible paths:

• Sell Assets, Buy Time: Selling off profitable leases could provide a short-term cash cushion.
• Find a Strategic Buyer: Teaming up with a strong e-commerce player (like ABG did with Reebok) could be its best shot at survival.
• Chapter 11, Round Two: If all else fails, another bankruptcy filing could mean more store closures and a new attempt at restructuring.

Despite calling the Forever 21 deal a misstep, Jamie Salter hasn’t announced plans to offload the brand yet. But given ABG’s history, a sale to a digital-first retailer or a drastic business overhaul wouldn’t be surprising.

Retail’s Reality Check

Forever 21’s ride has been a masterclass in what not to do from aggressive overexpansion to slow digital adoption. Its struggles are a stark reminder that brick-and-mortar retail must evolve or risk extinction. The big question now? Can Forever 21 pull off one more comeback, or is this the final curtain call for the mall staple? Only time and consumer dollars will tell. Stay ahead of the trends and the headlines—subscribe now and never miss a beat.