Shopping malls across the U.S. face massive change as Forever 21 shuts down all 354 American stores by May 1, 2025. Once a teen fashion powerhouse, the brand’s second bankruptcy in six years marks the end of an era.
Chief Financial Officer Brad Sell admitted the company “has been unable to find a sustainable path forward, given competition from foreign fast fashion companies.”
Closing the stores wipes out 7.7 million square feet of mall space, leaving landlords scrambling to fill the massive holes.
Liquidation Approved
On June 24, 2025, the Delaware Bankruptcy Court approved Forever 21’s liquidation plan, officially ending its 40‑year run in American fashion. The sale will use proceeds to pay off creditors, with unsecured creditors promised 70% of net funds.
Parent company Sparc Group even gave up a $323 million claim to simplify the process. Forever 21’s assets were valued between $100 million and $500 million, compared to debts as high as $10 billion.
Once a brand making nearly $5 billion a year, Forever 21 is now being sold off piece by piece in going‑out‑of‑business sales.
Korean Dream
Forever 21 started in 1984 when Korean immigrants Do Won Chang and Jin Sook Chang used $11,000 in savings to open a small Fashion 21 store in Los Angeles.
The couple moved to America in 1981 and worked humble jobs before noticing that people in the fashion business seemed to be the wealthiest. Their first store made $700,000 in its first year.
By 1987, they renamed the business Forever 21 and began expanding, creating a retail empire that defined fast fashion for a generation of American teens.
Fast Fashion
Forever 21 revolutionized U.S. retail by bringing runway trends quickly and cheaply to everyday shoppers. The brand aggressively added new stores, especially in malls, and by 2016, it had about 800 stores worldwide, 500 in the U.S. alone, and 35,000 employees.
Its success came from selling trendy clothes for under $25. But what once seemed innovative later drew criticism for waste, poor labor standards, and disposable “throwaway” clothing.
Second Bankruptcy
On March 16, 2025, the chain filed for Chapter 11 bankruptcy again, losing over $400 million over three years. The company blamed “competition from foreign fast fashion companies,” pointing to Shein and Temu as key threats.
Forever 21 lost $150 million in 2024 alone, hurt by shrinking mall traffic and changing shopping habits. Despite being rescued in 2019 by Simon Property Group, Brookfield, and Authentic Brands Group, no buyers came forward this time, even though over 200 potential investors were contacted.
Employee Impact
Nearly 700 workers are losing their jobs. The Los Angeles headquarters shut down completely, and stores across California and Pennsylvania followed.
Employees ranging from executives to store managers were affected. Many store workers only found out through media reports.
This loss hurts young workers especially, as Forever 21 had long provided entry-level jobs and stepping stones for careers in retail.
Community Effects
The closing of Forever 21 stores removes thousands of low‑wage, starter retail jobs. Teenagers and young adults often got their first taste of work there, and in many communities, the store provided affordable fashion.
The loss reduces tax income, hurts suppliers and delivery services, and damages struggling malls in lower‑income areas.
Though many jobs weren’t glamorous or well‑paid, they provided valuable experience and income for young workers.
Mall Crisis
Forever 21 leaves behind big empty spaces in malls—on average, about 26,000 square feet. It was an anchor tenant in 123 malls and 55 outlets, especially for landlords like Simon Property Group and Brookfield.
Those malls face serious vacancy problems when mall occupancy rates are already falling.
Its exit also means some other mall tenants can break their leases or demand lower rents, adding more strain to struggling shopping centers.
CMBS Exposure
The closures carry significant risks for commercial real estate. Forever 21 was a top tenant in 74 mall properties backed by commercial mortgage-backed securities, tied to nearly $10 billion in debt.
Some loans are already in trouble, including Brookfield’s $505 million loan on the Natick Mall in Massachusetts.
Analysts warn that these properties were weak, and Forever 21’s departure could push them further into crisis.
Trade Loophole
Executives say foreign rivals Shein and Temu had an unbeatable advantage. Thanks to an old “de minimis” rule, packages under $800 could enter the U.S. without tariffs or duties.
Initially meant for travel souvenirs, the loophole allowed Chinese companies to ship cheap products straight to American shoppers at prices Forever 21 couldn’t match.
Temu and Shein accounted for over 30% of all de minimis packages. President Trump suspended the exemption in July 2025.
Rescue Attempt
Mall owners Simon Property Group and Brookfield, along with Authentic Brands Group, rescued the chain in 2019 for $81 million.
Initially, it seemed successful, with the brand rebounding to $2 billion in sales by 2021.
However, many suppliers were left with unpaid claims, and the complex ownership left Forever 21 divided into separate entities, making it hard to run effectively.
Ownership Drama
Authentic Brands Group leader Jamie Salter later admitted buying Forever 21 was “probably the biggest mistake I made.”
By 2021, Brookfield had already sold its stake, and Simon Property later divested, too. The overlapping roles of mall owners and brand managers caused conflicts of interest.
Forever 21 struggled to compete against fast online players like Shein and Temu without unity.
Competition Surge
By 2024, Shein dominated global fast fashion, winning customers with $4 tops and TikTok-fueled marketing. Temu spent billions promoting its app, which became the most downloaded app in the U.S.
Their cheap, fast, and direct-to-consumer models completely reshaped shopper expectations.
Forever 21 simply couldn’t keep up, as Shein hit a $66 billion valuation while Forever 21 crumbled under losses.
Failed Partnerships
In a last attempt, Forever 21 even partnered with rival Shein in 2023 to cross-sell products. It was a desperate move that showed weakness more than strength.
Over the years, Forever 21 tried 17 brand collaborations with celebrities and sports leagues, but none fixed its core problems.
Partnerships brought short-term attention but didn’t solve pricing, supply chains, or digital marketing issues.
Legal Legacy
Forever 21 has faced an avalanche of lawsuits for allegedly copying designs. Celebrities like Ariana Grande and brands like Gucci and Puma were among those who sued.
The company’s business model was to copy high-fashion looks quickly and cheaply. Ironically, Forever 21 also sued smaller stores for copying it.
The constant lawsuits drained money and hurt its reputation.
Policy Response
President Trump’s July 2025 order shutting down the de minimis loophole directly responded to Forever 21’s collapse and China’s growing retail influence.
The rule change also aimed to stop fentanyl smuggling hidden in low-value packages. But experts warn U.S. shoppers will now face higher prices on imported cheap goods.
The new policy came too late to save Forever 21, but may reshape online retail.
Industry Ripples
Forever 21’s collapse puts pressure on other retailers. Brands like H&M, Zara, and Uniqlo are maneuvering to capture lost market share.
Malls and department stores lose a traffic-driving tenant. Meanwhile, suppliers depending on Forever 21 must quickly find new clients or risk going bankrupt themselves.
In Los Angeles alone, the brand’s fall devastates the city’s fashion industry.
Social Media
Reactions are split. Some younger consumers cheered the fall of a brand linked to cheap “fast fashion” and environmental harm. Others felt sadness at losing affordable clothing options.
TikTok buzzed with “closing sale” hauls, highlighting contradictions between calls for sustainability and actual consumer behavior.
False rumors also spread, blaming labor lawsuits or regulations, though experts confirmed the main factor was online competition.
Historical Parallel
Forever 21’s fall resembles other big retail disasters—like Barneys New York in 2019 or Toys “R” Us years earlier.
As with them, Forever 21’s intellectual property may live on through licensing by Authentic Brands Group, but the stores themselves are gone.
The story follows a familiar pattern: private equity or landlords step in too late, taking value while failing to fix deeper problems.
End of an Era
Forever 21’s death shows the end of an era. The chain that popularized fast fashion in America became a victim of even faster, cheaper rivals.
Authentic Brands may keep the name alive abroad, but in the U.S., Forever 21 is done.
The fallout includes thousands of lost jobs and empty mall spaces, another sign that retail’s future is digital, global, and often ruthless.
