The struggling fast-fashion retailer Forever 21 is closing more stores in Southern California by May, laying off hundreds of employees in the process.
The store closures are coinciding with the pending headquarters closure in Los Angeles, where 358 people are losing their jobs.
Hampered by plummeting sales and rising competition from overseas e-commerce merchants, the 41-year-old company entered bankruptcy in 2019, closing at least 21 stores in California at the time. After decades of family ownership, the retail chain was sold in 2020 to investors, who now seek a new owner for the brand.
Local store closures and layoffs reported to the state include:
—The Outlets at Orange (20 layoffs)
—Main Place Mall in Santa Ana (24)
—Galleria at Tyler Mall in Riverside (63)
—Ontario Mills in Ontario (70)
—Victoria Gardens in Rancho Cucamonga (17)
—Montclair Place in Montclair (21)
—Lakewood Center Mall (30)
—Los Cerritos Mall (55)
It is likely that more stores are closing but have yet to be reported to the state. Readers noted that stores at Westfield Fashion Square in Sherman Oaks and South Coast Plaza in Costa Mesa had closing signs on store windows.
In letters submitted to California’s Employment Development Department, the company said the layoffs and store closures are permanent, beginning April 25 and continuing through May 9.
Employees, which include managers, sales associates and supervisors, were notified in late February, the letter states.
Companies that terminate a significant number of employees must submit a Worker Adjustment and Retraining Notification to the state. Forever 21’s letters were all signed by the company’s Chief Financial Officer Bradley Sell, who is also being laid off as the headquarters closes.
The company, with 58 stores in California, announced in February that it would shutter at least 200 stores nationwide, part of a bankruptcy process that is seeking a buyer. If no buyer steps forward, Forever 21 will likely liquidate all 350-plus stores, according to Bloomberg.
The job cuts at the L.A. headquarters include Masako Konishi, chief merchandising officer, and a handful of vice presidents, its general counsel, information technology and planning and allocation staff. Other layoffs include managers, designers, supply chain directors and managers of product development and store operations.
The retailer got its start as Fashion 21 in Los Angeles in 1984, launched by husband and wife Do Won and Jin Sook Chang. The first store opened on Figueroa Street. The retailer would rename itself Forever 21 and grow into a nationwide brand known for its trendy and cheap clothing for teens and 20-somethings. At its peak in 2015, the company reported $4.4 billion in sales and 1,300 stores worldwide.
Also see: Wage theft rampant in Southern California garment industry, officials say
Over the years, the company faced numerous controversies, including accusations of wage theft, the use of cadmium in its jewelry, controversial slogans on T-shirts and the cheap labor used abroad to sew its clothing.
Forever 21’s assets were sold in bankruptcy for $81 million in 2020 to a group of investors including Authentic Brands Group, Simon Properties and Brookfield Properties. That group, known as SPARC, owned a number of retail brands including Lucky, Eddie Bauer, Aeropostale, Brooks Brothers and Nautica before it was acquired.
In January, SPARC said it was merging with JCPenney, creating a new group called Catalyst Brands. Notably, the list of brands under the Catalyst banner does not include Forever 21. Instead, the company said it was seeking a new operator for the retailer.
Today, fast fashion in the U.S. has been swamped with competition from Chinese e-commerce companies such as Temu and Shein, which produce and sell items for pennies.
Originally Published:
