- Forever 21 filed for Chapter 11 bankruptcy protection on Sunday and announced it would close up to 350 stores globally, effectively ceasing operations in 40 countries, including most of its locations in Europe and Asia.
- In a letter to shoppers, Forever 21 emphatically said that it was not going out of business but instead taking "positive steps to reorganize the business."
- We visited Forever 21 stores in New York City and London the day after the bankruptcy announcement and saw firsthand why the company is in hot water.
- Visit Business Insider's homepage for more stories.
Turns out Forever 21 might not be quite as everlasting as its name lets on.
The fast-fashion retailer filed for Chapter 11 bankruptcy protection on Sunday night, writing in a letter to customers that it was taking "positive steps to reorganize the business" to "return to profitability."
Read more:Forever 21, once among America's fastest-growing fast-fashion retailers, files for bankruptcy
As part of the filing, the mall staple said it would close up to 350 stores globally, effectively ceasing operations in 40 countries, including most of its locations in Europe and Asia. Forever 21 will close as many as 178 US stores but continue to sell products on its website and select locations in the US, Mexico, and Latin America, a representative told Business Insider.
"This was an important and necessary step to secure the future of our company, which will enable us to reorganize our business and reposition Forever 21," Linda Chang, Forever 21's executive vice president, said in a press statement.
The announcement came after several months of speculation, following reports that Forever 21 had hired a team of advisers to help secure private-equity support as executives continued to butt heads with its cofounder Do Won Chang.
We visited Forever 21 stores in New York City and London the day after the retailer filed for bankruptcy protection and saw firsthand how it went from a fast-fashion powerhouse to a disorganized mess of cheaply made apparel.
First, we visited the Forever 21 store in New York City's Oculus, a shopping and transportation hub in the Financial District.
The first thing we noticed was bright yellow signs announcing a sale: up to 90% off, and select items for $1 and $5.
We arrived shortly after the store opened at 9 a.m., and there were very few shoppers in sight.
We immediately spotted messy, disorganized racks brimming with discount items.
There were also boxes of products and racks of hangers scattered around the store.
Then we made our way to the sale section, which was promoting racks of $5 clothing.
As we got closer, we saw that the area was a complete mess. In addition to the bare racks, nothing was in any distinguishable order.
Throughout the store, products were strewn about everywhere.
Many of the displays were in disarray, with unfolded clothing. Here, we saw an unmanned ladder.
There seemed to be no semblance of organization. This area included men's and women's T-shirts, plaid skirts, sports bras, and various accessories, with no through line.
Near the register, we spotted this "price menu" that included extremely cheap items, like home goods for $1 and outerwear for $9.
The register area was filled with more super cheap, disorganized products — but no shoppers.
Concurrently, we visited Forever 21's only London store, in the city's busy shopping area, Oxford Street.
While Forever 21 has said it will close most of its European and Asian stores, it's not clear whether this store will be affected.
In its heyday, Forever 21 was known for its cheap, trendy clothing. Today, the collection seemed somewhat uninspiring.
Our impressions of the store layout — a criticism of analysts — were good. It wasn't rammed full of inventory, and the apparel was neatly laid out.
But it was impossible to distinguish one section from another. The three floors of women's clothing seemed to merge into one another.
In its bankruptcy filing, Forever 21 highlighted "duplicative" inventory as one of its key challenges.
The design team, it said, was traditionally structured around creating products for each style (work, weekend, and night, for example) rather than by category (like tops or bottoms). This meant that they often ended up creating very similar products for different sections.
The company said its design teams would be centered on categories to combat this, to "reduce duplicative design and help produce the trendy fashion upon which its brand was built."
The clothing was certainly cheap. But online players such as Fashion Nova, Missguided, and Boohoo are selling clothing at a similar price point while rolling out thousands of new items seemingly daily.
Upstairs, it was sales mania.
The racks were immaculately organized, but it was concerning to see so much stock on sale. Many of the items seemed to be seasonless basics.
As we headed toward the exit, we saw signs urging customers to connect with the brand online. A quick glimpse on Instagram revealed that Forever 21 has the same number of followers as Fashion Nova and more than double that of Boohoo. Considering its massive following, and that it'll soon be free of some expensive real estate, it's possible that the company has the chance to turn business around and keep up with its online rivals.
That's certainly its plan.
"Filing for bankruptcy protection is a deliberate and decisive step to put us on a successful track for the future," the company said in a statement on Sunday.
Linda Chang, Forever 21's executive vice president, said in the statement that "this was an important and necessary step to secure the future of our company, which will enable us to reorganize our business and reposition Forever 21."