Clothing retailer Forever 21 is reportedly looking for additional financing and debt restructuring, according to published sources.
By: Pat Savage
The chain “has been eaten alive by the new monsters in retail today, digital shopping and ginormous discount stores finally offering hot fashion at their always good prices,” Yahoo Finance reported indelicately. “To hear Forever 21 is knocking on death’s door isn’t a shocker. In fact, one has to wonder what in the world took so long.”
“An inability to evolve internally has also hampered Forever 21. One of the formerly go-to destinations for disposable fashion is preparing a potential bankruptcy filing, according to a new Bloomberg report,” Yahoo added.
The retailer, founded in 1984, operates over 800 stores in the U.S., Europe, Asia and Latin America. The stores are known for its trendy offerings and low pricing. The average store size is 38,000 square feet (3,500 m2). The company sells accessories, beauty products, home goods and clothing for women, men and girls. The company has been involved in various controversies, ranging from labor practice issues to copyright infringement accusations to religion. The clothing is sold to all ages, from toddler to adult.
Forever 21 started in a Highland Park storefront “and grew into a fast-fashion powerhouse, for years aggressively expanding the footprint of its stores stocked with rack after rack of cheap fashion mostly made in China,” according to labusinessjournal.com. “With more than two dozen sites around Los Angeles County, Forever 21 and its yellow bags have become a staple of regional shopping plazas. But as e-commerce swept the industry and online retailers like Fashion Nova, Revolve Group Inc. and competitors Hennes & Mauritz and Inditex’s Zara gained strength, Forever 21 lost its hold on young shoppers.”
While the financial health of Forever 21 is “a major concern for the company itself, the closing down of stores would also have a substantial ripple effect upon the state of floundering shopping malls around the globe, in the USA especially,” according to hypebeast.com. “The fast-fashion company is currently Simon Property Group Inc.’s sixth-largest tenant with a total of 99 American stores (out of its 800 stores worldwide) that cover over 1.5 million square feet according to a recent filing. If the majority of those stores shut down as a result of bankruptcy, it’d be extremely difficult for mall landlords to replace Forever 21’s presence with new tenants.”
In September 2001, the Asian Pacific American Legal Center and the Garment Worker Center, workers’ advocacy groups, filed a lawsuit against Forever 21, charging them of violating labor practice laws, according to Wikipedia. They claimed that 19 contracted employees received less than the minimum wage, that the hours on time cards were reduced, that workers who complained to the state were fired, and that the employees faced sweatshop-like working conditions. Forever 21 denied the accusations, asserting its commitment to fair labor practices and that “none of the workers named in the suit were directly employed by the company.”
