FOREVER 21, the 5th largest fast fashion retailer
in the United States, is reportedly facing bankruptcy. Founded in 1984 by a Korean-American
couple, FOREVER 21 operates more than 800 stores in the U.S., Europe, Asia and Latin
America. This week Korea Now will look into FOREVER 21 and the story of its rise and fall. FOREVER 21 began as the store called Fashion
21 with 900 square feet (84㎡) in Highland Park, Los Angeles. Do Won Chang and his wife
Jin Sook Chang, who immigrated to the U.S. from South Korea in 1981, opened the store
in 1984 with only US$11,000 in savings. After the store took off in LA, they expanded to
other locations and the store’s name was changed to FOREVER 21. Originally FOREVER 21 only
sold clothes for women but later expanded to menswear as well. The company now sells
accessories, beauty products, home goods and clothing for women, men and girls. And the
clothing is sold to all ages, from toddlers to adults. FOREVER 21 is known for its trendy styles
and low pricing. Designs similar to those seen in South Korea were sold to and targeted
at the LA Korean American community. In its first year in operation, sales totaled US$700,000
and by 2013 it generated a revenue of US$3.7 billion. It currently operates more than 800
stores in 57 countries around the world with about 30,000 employees. It has more than 500
stores in the U.S. alone, including a huge store near the White House in Washington D.C.
Mr. and Mrs. Chang were listed on Forbes’ 2019 billionaire list with their total net
asset estimated at US$1.5 billion. However, FOREVER 21 has faced a major crisis
due to the recent downturn cycle in the clothing distribution industry. As e-commerce companies
such as Amazon started to dominate the clothing distribution market, offline clothing retailers
have not been able to escape a liquidity crisis. According to Bloomberg, FOREVER 21 is preparing
for a potential bankruptcy filing as the fashion retailer’s cash dwindles and turnaround
options fade. The company has been working on restructuring its debt, but negotiations
with possible lenders have so far stalled. Therefore, focus has shifted toward securing
a potential debtor-in-possession loan to take the company into Chapter 11, even as some
window remains to strike a last-minute deal that keeps it out of court. The company has also been involved in various
copyright controversies. Most recently, the pop star Ariana Grande is suing FOREVER 21
and seeking US$10 million in damages, claiming that the retailer used her unauthorized likeness
in a social media campaign. Bankruptcy filing does not mean that FOREVER
21 will be closed. It would rather help the company shed unprofitable stores and recapitalize
the business. However, the fact that FOREVER 21 is preparing for potential bankruptcy can
be big news to American teenagers born in the 1990s, because FOREVER 21 was a kind of
trend setter for them. Let’s take a listen to what Jessica had to say who spent her teenage
years in California in the 2000s. “When I was in middle school and high school back
in the states, FOREVER 21 was the place I would just go to with my friends just to take
picture and try on the clothes. So if they all close down, I think it’s going to hit
me like one of my teenager memories is gone Now I feel like I’m old…” What are your
thoughts on this? Please let me know with your comments below and thank you for watching
Korea Now.