These big retailers went belly up in 2025

The American high street faced another reality check in 2025, as some of its most famous names finally called it a day. From the pharmacy counters of Rite Aid to the balloon aisles of Party City, the year saw a wave of bankruptcies.

Many of these household names were hit by a combination of rising debt and shifting customer habits. As inflation stayed high, shoppers tightened their belts and left specialty shops for online competitors like Amazon $AMZN or in-person giants like Target $TGT. For chains already struggling with high-interest loans and the cost of keeping huge, quiet stores open, the writing was on the wall.

But as some folded, others showed signs of life. Here are the brands that closed their doors — and the ones eyeing a return.

Forever 21

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Forever 21 filed for bankruptcy for the second time in six years in March. The brand was founded in Los Angeles in 1984 and was making more than $4 billion in revenue a year at the height of its popularity with millennials in the early 2010s. It was known for affordable style and had more than 540 stores across the U.S. 

As a generation of teens grew up, the retailer failed to evolve and ended up going bankrupt for the first time in 2019. Then, it was bought out by a group of investors, but the fast fashion giant Temu eventually helped undo the brand.

In a court filing, Stephen Coulombe, Forever 21’s co-chief restructuring officer, wrote that it was “materially and negatively impacted” by Shein and Temu’s use of the de minimis exemption, which “undercut” its business. De minimis was a trade loophole that allowed small-value parcels to enter the U.S. without tariffs — until President Donald Trump squashed the rule over the summer. The company also blamed “rising costs, economic challenges impacting our core customers[,] and evolving consumer trends.”

Forever 21 has said its U.S. stores will close permanently as part of the liquidation of its Chapter 11 proceedings, though the brand’s online presence is expected to continue under new operators.

Rite Aid

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For many Americans growing up in the 1990s, a trip to Rite Aid was a familiar part of everyday life, from picking up prescriptions to getting a scoop of its cult-favorite ice cream brand, Thrifty. Founded in 1962 in Pennsylvania, the chain became a ubiquitous pharmacy and drugstore with more than 5,000 locations nationwide at its peak. 

But in 2023 it filed for its first bankruptcy after amassing a debt pile of more than $4 billion. Part of that was down to expensive legal battles over its alleged role in the opioid epidemic. The firm survived via a deal to cut its debt by closing some 500 stores, but it filed again in May 2025. It eventually shut down its final 89 stores in October, shifting millions of prescriptions to former rivals, including Walgreens $WBA, Albertsons, and CVS Pharmacy. Meanwhile, Thrifty was sold separately for around $19.2 million to a partnership linked to Monster Beverage $MNST executives, meaning the ice cream brand lives on.

Party City

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Party City first opened its doors in New Jersey in 1986, selling balloons, streamers, and pretty much anything else you might want for a party. At its height, the retailer operated more than 800 locations across North America and held a dominant 20% share of the U.S. party goods market.

However it too filed for bankruptcy in early 2025, less than two years after a previous attempt to restructure its debt. While a 2023 filing eliminated some debt, the company remained burdened by $800 million in liabilities and a high-interest rate economy. Bosses pointed to a "perfect storm" of economic pressures, including a global helium shortage that crippled its balloon business. 

Retail giants such as Amazon, Walmart $WMT, and Target also eroded its business, alongside seasonal competitor Spirit Halloween, which often moved into neighboring storefronts to grab crucial October revenue. Party City eventually closed down in early 2025, and while the brand was sold on to survive as an online entity, the physical "balloon walls" that defined American birthdays for decades vanished.

Joann

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Fabric and craft giant Joann eventually unravelled after 82 years in business this year, filing for a Chapter 11 bankruptcy in January 2025. Founded in Cleveland in 1943, the retailer had become a cornerstone of American DIY shopping, operating about 800 stores and holding a third of the U.S. sewing supplies market at one stage. 

Management cited "sluggish sales and constrained inventory levels" as key drivers, noting that customers were increasingly trading down to cheaper alternatives or avoiding specialty trips altogether. Former CEO Michael Prendergast said the last several years had presented "significant and lasting challenges" that the firm’s financial position could not withstand. 

The company name was eventually rescued by rival Michaels to launch "Knit & Sew Shop" sections within its own stores. But DIY enthusiasts have had to say goodbye to the sprawling warehouses that anchored the Joann brand for many years.

Claire’s, Hooters, and the holdouts

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It wasn’t all bad news, with some familiar names making nostalgia-driven comebacks. Toys “R” Us has been edging back into shopping centres with physical stores, seasonal holiday sites, and small shop-in-shops at Macy’s.

Claire’s, a go-to for first piercings and teen accessories for decades, also survived after its most recent bankruptcy — with a rescue deal keeping around 800 stores open, in a recovery many had written off.

Hooters also filed for Chapter 11 in early 2025 but has since been bought back by its original founders and franchise partners, who are moving to relaunch the brand with retro updates to servers' uniforms and a menu revamp.

Meanwhile Bed Bath & Beyond, which closed in 2023, is preparing a return under new ownership, while the likes of Abercrombie & Fitch and Esprit have seen interest pick up again after rebrands. Even shoppers gripped by Amazon have long memories, and established brands can still attract investors looking for a turnaround.

For the brands that hit the wall this year, pared-down returns and reboots could yet be in the cards. Retail’s in its zombie era — never say never.