Forever 21 Files for Bankruptcy

After a timeline of 30 years in business, name changes, business campaigns and catastrophes, fashion giant Forever 21 announced it has filed for bankruptcy protection earlier this week. 

The announcement comes after months of speculation regarding the financial stability of the trend-setting company. Canada and Japan are just a few of the 40 countries affected by the Chapter 11 bankruptcy filing, which will mean Forever 21 reorganises any debts, business affairs and assets. Typically, it is the most expensive method of a bankruptcy proceeding. 

Almost 500 of its 723 store doors are to close however, a number of stores will continue their business mainly in shopping centres in the United States, Mexico and Latin America, alongside their online website which will remain in operation. 

Originally named Fashion 21 by South Korean CEO Do Don Wong Chang, the chain began in 1984, just three years after Chang and his wife, Jin Sook emigrated to Los Angeles. He realised the scale and potential of the fashion industry and quickly set up the shop in a 900-foot square space. 

In its first year of business, Fashion 21 took in $700,000 in sales alone by producing and selling traditional Korean style clothes aimed at the Korean population of LA. After they proved their popularity, they expanded every six months by opening new stores and quickly changed their brand to become what we now know as Forever 21. 

While over a number of years the brand has been subject to questionable fashion statements and oftentimes become a joke or meme, it’s remained popular for many reasons. They constantly adapted to a changing market and they not only followed trends, but created their own.  

In the early 2000s, the chain gained rapid popularity alongside other major names such as Zara and H&M by imitating high-end fashion retailers, but for much lower costs. Even through the brand name of ‘Forever 21’, it continuously aimed its products at a young market with disposable income. 

“Old people want to be 21 again, and young people want to be 21 forever,” said Chang in a 2012 interview about the idea behind his company’s name. 

Adding a section for male fashion, fitness wear and plus size clothing saw the business continue to flourish. However, this did not come without any challenges. 

Online shopping sales sparked a new era of the retail industry right as the brand made their biggest expansion in their lifetime. Linda Chang, said  they grew from stores in just “7 countries to 47 countries within less than a six year timeframe, and with that came a lot of complexity.” Their revenue dropped from $4.4 billion in 2016 to $3.3 billion last year and the damage continued as over 10,000 people lost employment with the company since the same year. 

Their latest trouble only occurred a month ago, involving a lawsuit with Ariana Grande. The singer filed a $10 million case against the company over an ad campaign which involved similarities to the hit music video to her song ‘7 Rings’. Her legal team claim damages for copyright, infringement false endorsement and violating her publicity right. 

The ad involves a model similar in looks and style to Grande, surrounded by bright purple lighting.  

The company have yet to respond in court but have issued a statement in which they do not comment on the ‘pending litigation’ but state that they are ‘huge supporters of Ariana Grande’. 

Although the retail outlet has had its ups and downs, there is no doubt their existence is important for the fashion industry to learn to maneuver through challenges, change and growth.