Forever 21 has filed for bankruptcy and will soon cease operations in 40 countries and close up to 350 stores globally. At its peak, the company made $4.4 billion in revenue and made its founders, South Korean immigrants Jin Sook and Do Won “Don” Chang, billionaires.
The company’s key to success was simple: cultivate a huge following by selling trendy clothing for low prices. As a result, Forever 21 became one of the largest tenants of U.S. malls, with 480 locations nationwide. By 2015, business was booming. Forever 21’s sales peaked, with $4.4 billion in global sales that year. However, the company’s aggressive expansion eventually led to its downfall, as its styles became more “cookie cutter” and competitors such as H&M and Zara siphoned off shoppers. Sales have declined an estimated 20%-25% from their peak.
Post-bankruptcy, Forever 21 announced that it will evaluate the potential closure of 170 underperforming stores in the United States out of its 549-store footprint. Closures are planned before the end of the year. It is likely Forever 21 will enter negotiations with landlords for rent concessions in locations where it is undecided to close. Among major mall owners, only 1 store of 99 leased by Simon Property Group is slated to close, while Macerich, Taubman, PReit and Washington Prime may see half of their Forever 21 stores disappear. Tanger Outlets fared the worst, with 9 of 11 stores possibly closing.