A clothing chain that was once a fixture in every mall across America is to close 200 more stores as it prepares for second bankruptcy in five years.

Amid mounting debt, Forever 21 could file for Chapter 11 protection as soon as next month, Bloomberg News reported on Wednesday. A

Should a buyer not be secured, all remaining US stores of Forever 21 will permanently close their doors. During this time, customers will have the opportunity to purchase items at reduced prices as the stores look to clear out their inventory.

It was only in 2019 that the chain last filed for bankruptcy. Under that it shut hundreds of stores and emerged in 2020 with a new owner.

At its peak, Forever 21  – the go-to store for American teenagers for decades – had more than 500 stores in the US and 800-plus globally. 

‘Forever 21 has been battered by the rise of Shein and to a certain extent Temu,’ retail expert Neil Saunders told DailyMail.com.

Forever 21 has encountered stiff competition from other retail giants within the mall environment such as Zara and Uniqlo. The landscape of fast fashion has evolved, raising the standards for competitiveness. Unfortunately, Forever 21 has struggled to meet these heightened expectations.

The underlying issue for Forever 21 lies in the loss of its unique identity. Its vast retail spaces are oversized for its current needs and are stocked with products lacking a distinctive aesthetic or appeal. This has contributed to its challenges in the highly competitive fast fashion industry.

Forever 21 is renegotiating the leases for its some 380 stores in the US as commercial rents soar across the country

A line of shoppers get the first opportunity to shop on the opening day of fast fashion e-commerce giant Shein, which hosted a pop up inside Forever 21 at the Ontario Mills Mall in Ontario on October 19, 2023

‘It’s the kind of generic ‘stuff’ that many shoppers are happy to pass on, or which they can find much cheaper online.’

Under a second bankruptcy, bosses would also be looking for a buyer for the retailer’s remaining stores.

However – if no buyer emerges – Forever 21 would likely liquidate its entire chain of the remaining stores. 

But even if the Forever 21’s American stores shut down, it would not mean the end of the brand in the US, and certainly not globally.

Its trademark and intellectual property rights are owned by Authentic Brands, which licenses the name to Catalyst Brands in the US.    

This licensing model has become increasingly common, with companies acquiring struggling but well-known retail brands and leasing their names to third-party operators.

Authentic Brands’ ownership of the Forever 21 brand would remain intact through any bankruptcy process, Bloomberg said. 

It plans to license Forever 21 to other existing retailers and distributors regardless of the outcome of Catalyst Brands’ potential sale or liquidation in bankruptcy, one of the people told Bloomberg. 

Authentic acquired Forever 21 during its first bankruptcy.  In January last year, CEO Jamie Salter said the deal was ‘probably the biggest mistake’ of his career. 

He added that he failed to see Shein and Temu as serious competitors and by the time he recognized the threat they posed, the damage was already done 

A second bankruptcy and the latest closures affect its US operations only. There are around 120 other stores worldwide.   

Temu is another Chinese-based e-commerce retailer that sells clothes at ultra-cheap prices. It, along with Shein, have emerged as Forever 21’s main competitors

Pictured: Forever 21’s flagship location in Times Square, Manhattan. It spans 90,000 square feet and has four floors

Authentic Brands CEO Jamie Salter, pictured, said that acquiring Forever 21 was ‘probably the biggest mistake’ of his career. He added that he failed to see Shein and Temu as serious competitors and by the time he recognized the threat they posed, the damage was already done

At its peak in 2015, Forever 21 was worth $6 billion, making its married South Korean founders Do Won Chang and Jin Sook Chang supremely wealthy.

Forever 21, Catalyst Brands and Authentic Brands did not immediately respond to Reuters’ requests for comment.

Signs of trouble surfaced last summer when Forever 21 asked landlords for rent reductions of up to 50 percent in some locations. 

The announcement comes as American stores accelerate retail closures. 

Dozens of giant chains — including Macy’s, Party City, and Big Lots — launched a massive slate of store closures in the past 12 months amid changing customer trends. 

A study recently revealed that retailers across America are expected to accelerate store closures to 15,000 shuttered locations this year. Just over 7,300 stores closed shop last year.