Forever 21 could be a step closer to shutting down operations in the US after the brand’s operating company filed for bankruptcy protection.

The firm said in a statement that its stores and website in the US will remain open as it “begins its process of winding down”.

Forever 21 was once a favourite of young women around the world, but it has struggled to attract customers to its shops because of rising prices and the growing popularity of online shopping.

The company filed for bankruptcy protection for the first time in 2019, but a group of investors ended up buying it through a joint venture.

“We have been unable to find a sustainable path forward, given competition from foreign fast-fashion companies… as well as rising costs, economic challenges impacting our core customers,” Brad Sell, the company’s chief financial officer said in a statement.

The firm said it would conduct liquidation sales at its stores and that some or all of its assets would be sold in a court-supervised process.

“In the event of a successful sale, the Company may pivot away from a full wind-down of operations,” the firm’s statement said.

Chapter 11 protection postpones a US company’s obligations to its creditors, giving it time to reorganise its debts or sell parts of the business.

Forever 21’s shops and e-commerce platforms outside of the US are operated by other licence-holders and will not be affected by the bankruptcy protection filing.

The fast-fashion retailer was founded in Los Angeles in 1984 by South Korean immigrants.

Its inexpensive, trendy clothes and accessories became increasingly popular with young people over the next few decades and the brand became a competitor of fast-fashion giants such as Zara and H&M.

At its peak in 2016, there were 800 Forever 21 shops around the world, 500 of which were located in the US.