Fast-fashion retailer Forever 21's US operating company has filed for Chapter 11 bankruptcy protection for the second time in six years, as the brand continues to struggle with changing consumer habits and fierce online competition.

The company, F21 OpCo, which operates roughly 350 stores across the United States, announced the filing on Sunday. The move will likely lead to liquidation sales at its locations as the firm has been unable to find a buyer for its US operations.

"We have been unable to find a sustainable path forward, given competition from foreign fast fashion companies, which have been able to take advantage of the de minimis exemption to undercut our brand on pricing and margin, as well as rising costs, economic challenges impacting our core customers, and evolving consumer trends," said Brad Sell, chief financial officer of F21 OpCo.

The company cited the rise of e-commerce giants such as Amazon and fast-fashion competitors like Shein and Temu as significant factors in its decline, alongside dwindling mall traffic as American mega malls continue to lose popularity.

Founded in Los Angeles in 1984 by South Korean immigrants, Forever 21 became known for offering trendy but affordable clothing to young shoppers. At its peak in 2016, the brand operated around 800 stores globally, with 500 in the United States alone.

The company previously filed for bankruptcy in 2019 and was purchased by Sparc, a joint venture between Authentic Brands Group and mall operators Simon Property and Brookfield Asset Management.

F21 OpCo has listed estimated assets between $100 million and $500 million, with liabilities ranging from $1 billion to $10 billion, according to court documents filed in Delaware.

The bankruptcy filing will not affect Forever 21's international stores, which are operated by other licensees. The company's US stores and website will remain open during the court-supervised sale process.

Authentic Brands Group will continue to own Forever 21's trademark and intellectual property, which could potentially be licensed to other operators in the future. Notably, Authentic Brands chief executive officer Jamie Salter last year called acquiring Forever 21 "the biggest mistake I made."

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