‘Forever 21,’ the global fashion brand founded in 1984 by Korean American couple Do Won Chang and Jin Sook Chang, is undergoing massive restructuring ahead of a potential second bankruptcy filing. Industry analysts suggest that Forever 21 may be on the path to complete closure.

At its peak in 2015, Forever 21 recorded annual sales of $4.4 billion and was thriving. However, it struggled to keep up with competitors and faced a liquidity crisis due to sluggish sales, ultimately filing for Chapter 11 bankruptcy protection in federal court in September 2019. In February 2020, the company was sold for $81 million to a consortium led by real estate firm Simon Property Group and others.

According to industry sources on the 4th, ‘Catalyst Brands,’ which has been managing Forever 21 since acquiring it from the consortium, plans to close more than 200 stores across the U.S. to restore financial stability and attract potential buyers. This restructuring includes laying off nearly 700 employees, including 358 from its Los Angeles headquarters, as well as staff in California and Pennsylvania.

At its headquarters in LA’s Fashion District, a total of 358 employees—including executives, designers, supply chain managers, product development staff, and store operations personnel—are slated for layoffs. According to a report submitted by Forever 21 to the California Employment Development Department (EDD), the layoffs at its headquarters will take place gradually between April 21 and May 5. Stores scheduled to close in California include locations in Orange, Riverside, Ontario, Santa Ana, Lakewood, and Cerritos.

Forever 21 is preparing to file for its second bankruptcy this month. The company is currently seeking investors, and if a buyer emerges, it may attempt to turn around its operations while maintaining some stores. However, industry observers note that if it fails to secure an investor, Forever 21 is likely to shutter all of its remaining 350 stores and liquidate the business entirely.

At its height, Forever 21 operated over 500 stores in the U.S. and 800 worldwide, but it rapidly declined after encountering financial difficulties.

A Catalyst Brands representative stated, “We are continuing to explore strategic options, including a potential sale, while working on cost reduction and optimizing store locations.”

<Hongyong Park>