Forever 21 embodied the American dream. The vision behind the fast fashion company transformed its immigrant founders into billionaires, and, at its peak, made estimated $4.4 billion in revenue … before its downfall led to bankruptcy.
Do Won Chang and Jin Sook Chang immigrated to the United States from South Korea in 1981 with little money and no college education. Here, they worked as a hairdresser and a janitor, to make ends meet. Until Do Won observed that “the people who drove the nicest cars were all in the garment business.” Three years later, with $11,000 in savings, the couple opened a clothing store named ‘Fashion 21’ in LA, the predecessor to ‘Forever 21’, with a vision of retailing designs similar to those in South Korea to LA’s Korean American community. It wasn’t long before the fashion brand evolved into a destination for stylish apparel at affordable prices — the pioneers of “fast fashion.” The company generated an estimated $700,000 in its first year and the early success spurred further growth.
Initially ‘Fashion 21’ was popular with just LA’s Korean American community but the couple leveraged its success, opening stores every few months, and changing the name to ‘Forever 21’ to emphasize that it was “for anyone who wants to be trendy, fresh and young in spirit.” In 2015, sales peaked at estimated $4.4 billion. Per Business insider, “The Changs became one of America’s wealthiest couples, with a combined net worth reaching an estimated $5.9 billion in March 2015.” Their daughters, Esther and Linda, also joined the company. The success mantra was simple: sell on-trend apparel for low prices — fast. Jin Sook approved over four hundred designs a day, retailing trends as it happened, which eventually landed it in hot waters. Moreover, as the company grew bigger, its styles became “cookie-cutter” and retailers H&M and Zara posed stiff competition. Per Forbes, “the company scaled back on its rapid expansion and the Changs’ net worth was cut in half to $3.1 billion by 2018.”
The downfall of ‘Forever 21’ was just as swift as its ascent. Reportedly, fifty copyright violation lawsuits were placed against Forever 21 with Diane von Fürstenberg, Gwen Stefani, Anna Sui and Trovata among the designers who took action. Sales declined by 32 per cent in 2019, forcing the company to file for bankruptcy protection in September 2019. The retailer also announced it was ceasing operations in forty countries and focusing on core operations in the US and Latin America. Linda Chang, executive vice president for the company, reported in a company release that filing for Chapter 11 was “an important and necessary step to secure the future of our company, which will enable us to reorganise our business and reposition Forever 21.”
On February 2, 2020, Forever 21 inked a deal with a consortium of mall operators Simon Property Group and Brookfield Properties, and brand management firm Authentic Brands Group, to sell its assets for reported $81 million. Following the acquisition, ABG expanded ‘Forever 21’ in Latin America through licensing deals. During that time, it also relaunched its online store in 30 countries through the e-commerce company Global-e, targeting consumers in Canada, Asia Pacific, and Latin America. ABG and Simon each acquired 37.5 per cent of the company’s intellectual property and operating businesses, while Brook field acquired 25 per cent. SPARC, a joint venture between Simon Property Group and Authentic Brands Group, took over Forever 21’s management after the sale and appointed Daniel Kulle as Forever 21’s new CEO and immediately began expanding Forever 21 in Latin America via licensing deals That month, it also re-entered the UK and EU markets, opening online stores for British customers. Among other countries, in early 2020, it pulled out of Guam, South Africa and Lebanon.
In May 2021, Brookfield Property Partners sold its stake in Forever 21 for reported $63 million. After YM Inc. became the Canadian licensee for Forever 21 in June 2021, Hudson’s Bay announced a collaboration with Forever 21 in Canada. In August 2021, Forever 21 authorized Lasonic Limited Xusheng Co. Ltd. to manage its operations in China. Per Women’s Wear Daily, Forever 21 had also “reentered major e-commerce platforms like Vip.com and Pinduoduo.” It had 540 locations by December 2021 and, that month, partnered on product lines with JCPenney, owned by Authentic Brands Group. In December 2021, Forever 21 hired Virtual Brand Group to create a metaverse game for the company that allowed players to operate custom fashion stores.
However, the tides turned as ABG sued Bolt Financial in New York for failure to “deliver promised technology”, stating that Forever 21 had lost $150 million in online sales due to a botched rollout of a new e-commerce platform in 2021. ABG described Bolt’s software integration with Forever 21’s mobile app as “disastrous,” with multiple technical issues interfering in purchases. Bolt argued the claims were meritless. In early 2022, Forever 21 collaborated with Hervé Léger, Sports Illustrated, and Barbie. That summer, the company opened a new flagship store in India licensed by Aditya Birla Fashion and Retail. In June 2022, Poetic Brands was granted licensee rights to manufacture, market, and distribute the brand in the United Kingdom and Europe.
To provide a captivating and exciting store environment with a never-ending flow of fun, on-trend fashion at a great value.
Winnie Park, CEO. Park, who reports to Sparc CEO Marc Miller, has decades of fashion and retail experience. Before Paper Source, she spent nine years at LVMH-owned luxury retailer DFS, where she launched its first global e-commerce site for fashion, beauty, watches, jewellery and spirits. Before that she led women’s merchandising at Levi Strauss-owned Dockers, and began her career at McKinsey & Company in fashion retail and consumer digital.
Apparel and accessories