Forever 21 is filing for bankruptcy. What does this mean?

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The News: The popular fashion store, Forever 21, has just announced that it is filing for bankruptcy. It wants to close a number of its stores internationally and in the US.

Why is Forever 21 going bankrupt? Forever 21 stocks very affordable, fast fashion. Over the years, it has faced fierce competition from online retailers like Amazon.com. It has also faced competition from other lower cost clothing companies like H&M and Zara. The other dynamic is that the younger customers these days are being environmentally conscious and want to buy more sustainable clothing, which Forever 21 doesn’t have.

Click here to read about fast fashion and sustainable clothing. 

What is bankruptcy? It is the legal status of a person or company when they have borrowed money but cannot repay it. After a company files for bankruptcy, it can get financial aid (money) from the US government to get back on its feet, if it follows strict rules and regulations.

What’s next for Forever 21? The company will be restructuring. Some of its stores in America, Asia and Europe are closing down, while others in Mexico and Latin America will stay open. Will it change its product offering to be more in line with what you, the consumers want? Will it move more of its sales online? We will have to wait and see what it looks like in its new avatar!


Written by: Biyash Choksey and Sunaina Murthy

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