Forever 21 goes belly-up and will shutter all US stores, blames Temu and Shein

New York Post - Mar 17th, 2025

Forever 21 has filed for bankruptcy protection for the second time in six years, largely due to intense competition from online fast-fashion companies like Shein and Temu. The retailer plans to close all its US operations, with liquidation sales already taking place at over 350 locations. Efforts to find a buyer for the business have been unsuccessful, despite reaching out to over 200 potential investors. The company's struggles are attributed to the competitive advantages enjoyed by non-US retailers who leverage the 'de minimis exemption,' allowing them to sell goods in the US duty-free, a loophole that Forever 21 claims places it at a disadvantage.

The announcement follows a challenging period post its first bankruptcy filing, with Forever 21 facing economic hurdles from the COVID-19 pandemic, inflation, and supply chain disruptions. Despite attempts to collaborate with Shein and calls to amend the trade exemption laws, the company could not offset its financial losses. Forever 21's international stores and online presence will continue, and its intellectual property remains intact under Authentic Brands Group, which is exploring new partnerships to rejuvenate the brand. The retailer's financial woes highlight the shifting landscape of the retail industry and the pressures on traditional brick-and-mortar stores from digital competitors.

Forever 21 Bankruptcy Shein Temu Authentic Brands Group Fast Fashion De Minimis Exemption Us Retail

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RATING

7.2

Fair Story

Consider it well-founded

The article provides a comprehensive overview of Forever 21's bankruptcy filing, highlighting key factors such as competition from online retailers and trade law challenges. It successfully conveys the company's perspective through direct quotes and court filings, though it could benefit from more diverse viewpoints and independent analyses to enhance balance and source quality. The narrative is clear and timely, engaging readers with its relevance to current economic and retail trends. However, the lack of transparency in sourcing and limited exploration of controversial issues slightly diminish its overall impact and engagement potential. Despite these minor shortcomings, the article effectively informs readers about a significant development in the retail industry.

Accuracy

The article accurately reports on Forever 21's second bankruptcy filing, citing competition from online retailers like Shein and Temu as a major factor. The claim about the de minimis exemption impacting Forever 21's competitiveness is supported by statements in court documents, aligning with the accuracy check. However, the exact number of potential buyers and the financial projections need verification, as these figures are not directly corroborated by external sources. Overall, the article presents a truthful account of the situation, but some specific details require further confirmation.

Balance

The article provides a balanced view of Forever 21's financial struggles by discussing both internal and external factors, such as competition and economic challenges. However, it primarily focuses on the company's perspective, particularly through statements from Stephen Coulombe and Jarrod Weber. While it mentions industry calls for trade law amendments, it does not include perspectives from competitors like Shein or Temu, or from policymakers. This omission limits the range of viewpoints presented, slightly skewing the narrative towards Forever 21's challenges without fully exploring other industry dynamics.

Clarity

The article is clearly written, with a logical structure that guides the reader through Forever 21's financial situation, its causes, and potential outcomes. It effectively uses direct quotes to convey key points, and the language is straightforward and accessible. However, some complex financial terms, such as EBITDA, are not explained, which may hinder comprehension for readers unfamiliar with financial jargon. Overall, the article presents its information in a clear and engaging manner.

Source quality

The article references credible sources such as court filings and statements from company officials, enhancing its reliability. However, it does not provide direct quotes or data from external sources like financial analysts or industry experts, which could have strengthened the report's authority. The reliance on internal company perspectives may introduce a bias, as these sources have a vested interest in portraying Forever 21's situation in a particular light. Including independent analyses would improve the overall source quality.

Transparency

The article lacks explicit disclosure of its information-gathering process, such as how it obtained court documents or company statements. While it quotes company officials and references court filings, it does not clarify the methodology behind these claims or acknowledge potential conflicts of interest. Greater transparency about the sources and context of the information would enhance the reader's understanding and trust in the article's impartiality.