How Forever 21 went from a fast-fashion powerhouse to bankruptcy and a troublesome future

GettyThe fast-fashion retailer has filed for bankruptcy.
  • Forever 21, once one of the world’s leading clothing retailers, has fallen on hard times. It filed for Chapter 11 bankruptcy protection on Sunday.
  • The company was founded in 1984 and pulled in $US700,000 in sales in its first year. Today there are 794 Forever 21 stores worldwide.
  • Founders Jin Sook and Do Won “Don” Chang had a combined net worth of $US5.9 billion at the company’s peak in 2015,Forbes reported. They were no longer billionaires as of July, according to Forbes’ estimates.
  • On Sunday, Forever 21 announced its bankruptcy filing in a letter to shoppers, writing: “Once we complete a reorganization, Forever 21 will be a stronger, more viable company that is better positioned to prosper for years to come. We look forward to continuing to provide you with the great service and curated assortment of merchandise that you expect from us.”
  • Here is the complete story of Forever 21, from its quick rise to become a top teen retailer to its slowdown and uncertain future.
  • Visit Business Insider’s homepage for more stories.

Once a hot spot for teen clothing, Forever 21 has filed for Chapter 11 bankruptcy protection.

But before its struggles, Forever 21 seemed unstoppable.

The company was founded by husband-and-wife duo Jin Sook and Do Won “Don” Chang after they emigrated from South Korea to Los Angeles in 1981. The pair opened their first store, then called Fashion 21, in 1984 and pulled in $US700,000 worth of sales in the first year.

The retailer thrived through the early 2000s, eventually peaking in 2015 when its founders were worth a record high of $US5.9 billion combined, Forbes reported. Today, Forbes estimates that the cofounders are no longer billionaires.

On Sunday, Forever 21 announced its bankruptcy filing in a letter to shoppers, writing: “Once we complete a reorganization, Forever 21 will be a stronger, more viable company that is better positioned to prosper for years to come. We look forward to continuing to provide you with the great service and curated assortment of merchandise that you expect from us.”

A representative for the company told Business Insider in a statement that the company planned to close most of its locations in Asia and Europe but to continue operations in the US, Mexico, and Latin America. Forever 21 will close up to 178 stores in the US and as many as 350 globally.

Here’s the story of the company, from its quick rise to global prominence to its slow downfall into uncertainty.


The story of Forever 21 began with a dream. Husband and wife Jin Sook and Do Won “Don” Chang emigrated from South Korea to America with ambitions to start a business.

Forever 21Forever 21 founders Jin Sook and Don Chang

Source: Business Insider


After working as a janitor and coffee server for three years, Don had a realisation. “I noticed the people who drove the nicest cars were all in the garment business,” Don told The Los Angeles Times in a 2010 interview.

Volkswagen

Source:Business Insider, The Los Angeles Times


In 1984, the couple opened a 900-square-foot clothing store in Los Angeles called Fashion 21, the predecessor to Forever 21.

Nancy T./YelpFashion 21 still exists in Los Angeles.

The business took off. In its first year, the retailer pulled in $US700,000 in sales. This initial success spurred further growth, and the couple began to open new stores every six months.

Source: Forever 21, Business Insider


The company eventually changed its name to Forever 21, and in 1989 it opened its first mall store in Panorama City, California.

Shoshy Ciment/Business InsiderThe Forever 21 in a Jersey City, New Jersey, mall.

In 1995 the company opened its first store outside California, in the Mall of the Americas in Miami, Florida. In 2001, the first international store opened in Canada.

Source: Forever 21


In 2003, Forever 21 launched its website …

Forever 21

Source: Forever 21


… and in 2006, it launched its men’s line.

Bethany Biron/Business Insider

Source: Forever 21


Forever 21 was soaring by 2010. There were 500 stores across the country, and the Changs had made it to No. 79 on the year’s Forbes 400 list of the richest Americans.

Shuji Kajiyama/Associated PressJin Sook Chang, left, attends the opening of a Forever 21 store in Tokyo on Thursday, April 29, 2010.

It wasn’t long before Forever 21 made itself known as a destination for trendy clothes at affordable prices, a specialty that has been dubbed “fast fashion.”

Ashley Lutz/Business Insider

The company peaked in 2015, when it was bringing in around $US4.4 billion in sales from over 600 stores and the founders had a combined net worth of $US5.9 billion.

Michael Buckner / Getty Images

Source: Forbes,Business Insider


But things would soon start going downhill from there. Rising competition from other fast-fashion brands like H&M was causing real problems for the family-owned Forever 21.

Shutterstock/Joshua Rainey Photography

In 2018, Forever 21 began downsizing and closing a number of European stores in Amsterdam, Dublin, and the UK, as well as some stores in North America.

Shutterstock/freemind-production

Source: Fashion Network


In the first quarter of 2019, H&M Group — the parent company of H&M that also owns brands including & Other Stories and Cos — reported a 10% increase in net sales.

Shutterstock/Stefan Holm

Source: Business Insider


Around that time, Business Insider’s Bethany Biron visited a Forever 21 and an H&M store in New York’s Westfield World Trade Centre mall and saw that H&M drew more shoppers with its organised and well-lit store.

Bethany Biron/Business InsiderThe interior of H&M.

Source: Business Insider


Though Forever 21 did not — and still does not — publicly disclose its finances, store closures in major global markets suggest that the teen retailer has struggled to find its footing in an increasingly competitive market.

Ashley Lutz/Business Insider

In June, Bloomberg reported that Forever 21 was exploring options for restructuring its business with private-equity firm Apollo Global Management.

Getty

In a statement emailed to Business Insider in June, a spokesperson for Forever 21 said: “Forever 21 is speaking with our lenders in the normal course of business and are in compliance with all of our agreements and continue to operate as usual.”

Source: Bloomberg, Business Insider


By July, the Changs were no longer billionaires and their combined fortune had slumped to $US1.6 billion, or $US800 million each, Forbes reported.

Ashley Lutz/Business Insider

Source: Forbes, Business Insider


The retailer announced it had filed for bankruptcy on Sunday evening.

Irene Jiang / Business Insider

Source: CNBC,The Wall Street Journal


A representative for the company told Business Insider in a statement that the company planned to close most of its locations in Asia and Europe but to continue operations in the US, Mexico, and Latin America.

Facebook/Forever 21

“This was an important and necessary step to secure the future of our company, which will enable us to reorganise our business and reposition Forever 21,” Linda Chang, the company’s executive vice president, said in the statement.

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