If at first you don't succeed....
Four years after Forever 21 failed in an attempt to purchase Mervyns from Target, the discount apparel chain is now making another bid to acquire 150 of the department stores locations as it operates under Chapter 11 bankruptcy protection.
"Our vision has always been to get a bigger box," Christopher Lee, senior vice president of Forever 21, told the Los Angeles Times. "We've been looking at these assets for many years."
Most of Forever 21's 430 U.S. stores are between 10,000 to 20,000 square feet and located in malls. Over the past couple of years, the chain has sought to open some larger stores such as converting a 40,000 square-foot site that had housed a Saks Fifth Avenue emporium. The average Mervyns runs about 80,000 square feet.
Liz Pierce, a retail analyst at Roth Capital Partners, told Apparel News, "If they can get this at a great price, if they have the capital to do it and it doesn't cause any pain, it could be a wise move. And then I could make the argument of, 'Whoa, really?' I don't know their return on investment on those big-box stores versus their smaller stores. And then there is the elephant in the room with the economy."
Jeffrey Van Sinderen, a retail analyst at B. Riley & Co., said, "Real estate is low right now. If you can get it at the right price, it is probably not a bad move at this juncture. It diversifies their footprint. It's an interesting idea."
Discussion Questions: Is now a good time for Forever 21 to be looking to buy 150 Mervyns? Will the Forever 21 concept translate from the smaller store format that has driven the chain's growth to a much larger footprint?