Fashion Industry Struggles: Bankruptcy Cases in 2025

Throughout 2025, numerous prominent fashion brands faced financial turmoil, leading to bankruptcy filings. Economic obstacles, tariffs, and fierce competition from fast-fashion giants such as Shein have significantly impacted their sales.

Economic Challenges in Fashion

The financial instability of the current economic climate has prompted consumers to reconsider their spending habits. Many have gravitated towards more affordable fashion alternatives or secondhand goods, causing a noticeable shift in market dynamics. In 2024, companies like Shein captured a larger share of the market, as reported by GlobalData, compelling competing brands to rethink their strategies.

Across the United States, more than 3,700 retail locations, including those of renowned brands like Carter's and Macy's, have closed in 2025, according to data compiled by Business Insider. These closures illustrate the ongoing challenges facing retailers.

Tariffs Add Fuel to the Fire

The imposition of tariffs under President Donald Trump's administration posed additional hardships for brands such as Abercrombie & Fitch and Nike. These businesses have had to either raise prices or adapt their supply chains to mitigate the financial strain.

Despite these efforts, some companies have been unable to pivot successfully in light of diminishing store visitation and rising tariffs. The apparel brands that filed for bankruptcy in 2025 highlight these difficulties.

The Fall of Forever 21

Once a favorite destination for young women in search of budget-friendly fashion, Forever 21 has experienced financial distress over the past six years, culminating in two Chapter 11 bankruptcy filings.

The dominance of low-cost online competitors like Shein and Temu has compromised its market position. Forever 21's 2025 bankruptcy documents identified the 'de minimis' rule, which allows tariff-free entry of goods valued under $800 into the US, as a significant impediment to maintaining competitive pricing.

In September, Authentic Brands Group, the custodian of Forever 21's brand, revealed partnerships intended to revive the US operations and pivot the focus towards a digital-first strategy.

The Struggle for Ssense

In August, Ssense, a digital platform renowned for its eclectic range of luxury fashion, filed for bankruptcy protection in a Quebec court. CEO Rami Atallah attributed their financial issues to the US trade policies imposed by the Trump era, citing a 35% tariff on Canadian goods not under free trade agreements.

Liberated Brands' Demise

The company behind iconic brands Billabong and Quicksilver, Liberated Brands, sought Chapter 11 bankruptcy protection in February. However, the case was later dismissed by May, marking an end to the company's retail presence in both the US and Canada.

Court documents from February indicate that the company struggled with overarching economic pressures, interruptions in supply chains, and declining revenues.

Sneakersnstuff's Financial Woes

January saw the insolvency of Sneakersnstuff, a well-regarded sneaker retail chain based in Stockholm, verified by its co-founder Peter Jansson. Subsequently, the brand fell under the ownership of Germany's Reziprok Ventures in February.