Forever 21 Looking To Close 200 Stores Amidst Bankruptcy Speculation

Over 200 Forever 21 stores are reportedly closing. Apparently, the retailer is considering bankruptcy, and shuttering locations is part of the deal.

Forever 21 closing stores as part of a Chapter 11 restructuring is a distinct possibility. While not officially confirmed, the company has been actively pursuing a buyer to avoid going out of business entirely, but so far, efforts have failed. Should a buyer surface, the retailer could avoid bankruptcy altogether.

Nonetheless, Forever 21 is making moves to downsize and cut costs. The company has already announced plans to lay off nearly 360 people and close its corporate office in Los Angeles.

According to the Los Angeles Daily News, CFO Bradley Sell filed a letter with California’s Employment Development Department that stated employee layoffs will start around April 21. After which, any remaining employees will be working from home.

“This decision was not made lightly,” said a company spokesperson, per USA Today. “And we remain committed to transparency and fair treatment of our employees during this period of transition.”

The Demise of Forever 21

At one time, Forever 21 had over 800 stores in the United States, mostly in shopping malls. Recent numbers indicate that its store portfolio has shrunk to 350 locations.

The brand gained tremendous traction among teens seeking fashionable clothes in the 1990s and 2000s. However, in the last decade, it silently watched as malls began fading nationwide and failed to recognize that its core customer preferred shopping online. As such, the company’s struggles began to surface.

In 2019, Forever 21 was on the brink of financial collapse and did, in fact, file for Chapter 11 protection. Yet, the fashion retailer was saved when property investors Simon Property Group and Brookfield Corporation partnered with brand licensing company Authentic Brands Group.

The combined trio purchased Forever 21, keeping the chain from closing up permanently. Yet, it did not turn out as hoped. Two years ago, Authentic Brands CEO Jamie Salter admitted buying the brand was a mistake. 

Even if Forever 21 shuts down every brick-and-mortar store, the brand will live on. Authentic Brands owns the retailer’s intellectual property, which still has marketable value. Competing against Temu, SHEIN, and even Amazon, Authentic Brands could shift Forever 21 to an all-digital model focused on fashion-forward clothes for the next generation.