Forever 21, the fast-fashion retailer known for trendy, low-priced clothing has become the latest mall giant to file for bankruptcy as it struggles to adapt to changing consumer appetites and a retail landscape dominated by online shopping.
The 35-year-old retailer will close 350 stores as it pulls its business from 40 countries. About half of the closures will be in U.S.; the rest are scattered throughout Asia, Europe and Canada. It will continue to operate in Mexico and Latin America.
“This was an important and necessary step to secure the future of our Company, which will enable us to reorganize our business and reposition Forever 21,” Executive Vice President Linda Chang said.
The retailer was founded in Los Angeles in 1984 by Do Won Chang and Jin Sook Chang. The husband and wife saved for three years before opening their first store, originally called “Fashion 21.” From the beginning, the Changs centered their business on affordable, of-the-moment clothing, much of which came from wholesale closeouts that allowed the company to get their merchandise directly from the manufacturers at a lower cost.
That first year it made $700,000 in sales. At its peak, in 2015, Forever 21’s revenue exceeded $4 billion.
“Forever 21 gives hope and inspiration to people who come here with almost nothing,” Do Won told the Los Angeles Times in 2010. “And that is a reward that humbles me: the fact that immigrants coming to America, much like I did, can come into a Forever 21 and know that all of this was started by a simple Korean immigrant with a dream.”
The company expanded rapidly from there, opening stores in dozens of countries while also growing in size: The average Forever 21 store is 38,000 square feet, according to the company’s website. As it grew, the family-owned company also tried to expand beyond its core base — primarily teens and women in their 20s — by moving into men’s and kids’ clothing, makeup and home decor.
Forever 21’s aggressive expansion coincided with seismic shifts in retail over the past decade, largely brought on by Amazon. The store always faced competition from such fast-fashion rivals as H&M and Zara, but the rise of e-commerce brought a wave of new competitors and imitators also geared toward the hip and cheap. Just 16 percent of Forever 21’s sales came from e-commerce last year. According to court filings, Forever 21 lists both assets and liabilities between $1 billion and $10 billion. (Amazon founder Jeff Bezos owns The Washington Post)
The company has also taken heat for the environmental and labor costs of its fast, disposable products, which has especially hurt the company as young people who make up the bedrock of its customers increasingly seek out more sustainable options.
Forever 21 has received $350 million for restructuring, which it will use to sustain normal business as it tries to “right size its store base and return to the basics that allowed the company to thrive and grow,” the retailer said in a news release.