Forever 21 is closing all 354 of its U.S. stores by May 1, following its Chapter 11 bankruptcy filing in March. The closure is attributed to intense competition from international fast fashion brands, rising operational costs, and changing consumer habits. Inflation since 2021 has exacerbated financial strain, increasing costs for inventory, distribution, transportation, and wages. The de minimis exemption allows non-U.S. retailers to bypass import duties, giving them a competitive edge over U.S. retailers like Forever 21. Despite the U.S. closures, international stores will remain open, though gift cards and store credits are no longer accepted, and refunds or exchanges have ceased as of April 15.

Forever 21 announced the closure of all 354 U.S. stores by May 1, following a Chapter 11 bankruptcy filing in March, without any buyer stepping forward by April 30.

International Forever 21 stores will continue operations, but U.S. stores stopped accepting gift cards and store credits on April 15, also halting refunds and exchanges.

The bankruptcy was filed in the U.S. Bankruptcy Court for the District of Delaware, citing competition from foreign fast fashion companies, rising costs, economic challenges, and changing consumer trends as key reasons.

Inflation since 2021 significantly increased operational costs for Forever 21, affecting inventory, distribution, transportation, and employee wages, as stated by the company's co-chief restructuring officer.

The de minimis exemption, which exempts goods valued under $800 from import duties, has allowed non-U.S. online retailers like Temu and Shein to offer lower prices, undercutting U.S. retailers like Forever 21.

The competitive retail environment has put additional pressure on Forever 21, with foreign competitors able to pass cost savings to consumers due to the exemption from import duties.

Despite these challenges, Forever 21's international presence remains intact, although the U.S. market faces a complete shutdown of physical stores.

Forever 21‘s U.S. stores are closing.

All 354 stores are expected to close by the start of May, following the company’s Chapter 11 bankruptcy filing back in March, per USA Today.

The stores are expected to close by May 1, per the court documents, while many began closing their doors as early as April 1.

As of the afternoon of Wednesday (April 30), a potential buyer had not come forward.

Keep reading to find out more…

A notice to customers on the Forever 21 website states that international stores will continue operating. The store stopped accepting gift cards and store credit on April 15, and refunds and exchanges are also no longer available.

Forever 21 filed for bankruptcy in the U.S. Bankruptcy Court for the District of Delaware on March 16, citing “competition from foreign fast fashion companies,” rising costs, economic challenges and evolving consumer trends as the reason, Brad Sell, F21 OpCo chief financial officer, said in a news release.

Inflation rates starting in 2021 led to a significant increase in F21 OpCo’s cost of operations, including the cost of inventory, distribution, transportation and employee wages, Stephen Coulombe, co-chief restructuring officer of F21 OpCo, said in a court document alongside the bankruptcy filing, per USA Today.

A “highly competitive retail environment” is also hurting Forever 21, due to the de minimis exemption, which exempts goods valued under $800 from import duties and tariffs, according to the co-chief restructuring officer.

“Certain non-U.S. online retailers that compete with the (F21 OpCo), such as Temu and Shein, have taken advantage of this exemption and, therefore, have been able to pass significant savings onto consumers,” he said in the document.

“Consequently, retailers that must pay duties and tariffs to purchase product for their stores and warehouses in the United States, such as the (F21 OpCo), have been undercut.”

Find out which fashionable toy is currently going viral around the world.