Forever 21 is going out of business primarily due to a combination of mounting debt, inability to compete with trendier and more socially conscious fast fashion brands, and failure to adapt its business model in a rapidly changing retail landscape. Key reasons include:

• The company filed for bankruptcy again in March 2025, leading to the liquidation of its US assets and closure of over 200 stores, with no plans for rescue or restructuring this time.

• Forever 21 struggled to recover after the pandemic, with declining foot traffic and losing younger Gen Z customers to rivals like Shein and Temu, who offer cheaper and highly trendy online fashion.

• The rise of international online fast fashion competitors that leveraged a trade law loophole to avoid import duties made Forever 21's costs higher and its products less competitive.

• The company suffered from stagnation, outdated mall leases, an aging business model, uninspiring merchandising, lack of a distinct brand identity, and failure to effectively use social media and e-commerce.

• Despite being bought out by Authentic Brands Group and mall owners in 2020 for $81 million after its initial bankruptcy, Forever 21 couldn't turn around its decline, as it kept losing market relevance and financial health.

In essence, Forever 21's decline was due to poor adaptation in a highly competitive fast fashion industry, compounded by financial burdens and shifting consumer preferences away from the brand.