Forever 21, the global fashion brand founded in 1984 by Korean-American couple Don Won Chang and Jin Sook Chang, has filed for bankruptcy protection, marking the end of an era. Once a leader in the fast fashion industry with over 500 stores in the U.S. and 800 worldwide, the company could not withstand the low-price offensive from Chinese online shopping platforms and is now fading into history.

The success story of the Changs, once a symbol of the American Dream and featured on Forbes’ “100 Richest People” list, has long since turned bittersweet.

According to the Wall Street Journal (WSJ) on the 17th, Forever 21’s operating company (F21 OpCo) and some subsidiaries filed for Chapter 11 bankruptcy protection in a Delaware bankruptcy court. This is the second such filing since September 2019. Under U.S. federal bankruptcy law, Chapter 11 allows a company to continue operations under court supervision while restructuring its debts.

However, the company stated it plans to wind down its U.S. operations in an orderly manner, though some stores and its website will remain active. Forever 21 stores outside the U.S., operated by separate licensees, are not included in this bankruptcy filing, the company clarified.

Brad Sell, Chief Financial Officer, said that despite evaluating all options, the company could not find a “sustainable path” amid competition from foreign fast fashion brands leveraging the “de minimis exemption” for low-cost offensives. He added that rising costs and economic challenges have impacted customer demand.

The WSJ reported that Forever 21 has faced fierce competition from Chinese online shopping platforms like Temu and Shein. In the U.S., the “de minimis exemption” allows individuals to import goods valued under $800 without tariffs, a loophole that Chinese low-cost online retailers have exploited to expand their market share.

With this bankruptcy filing, the myth that propelled the Changs to become one of the most successful Korean-Americans in the U.S. has also vanished into the annals of time. After immigrating to the U.S. in 1981, the couple opened their first store in LA’s Koreatown in 1984, introducing the concept of fast fashion to the industry and rapidly expanding their business. Fast fashion refers to a system where manufacturers handle production, distribution, and sales to supply low-cost products every two to three weeks.

Forever 21 grew into an SPA (Specialty Retailer of Private Label Apparel) brand alongside Zara, H&M, and Uniqlo, at one point claiming the top market share in the U.S. It operated 800 stores across 50 countries, employed 45,000 workers, and generated annual sales of 5 trillion won, cementing its status as a major fashion retailer.

However, overwhelmed by China’s low-price competition, liquidity crises, and other adversities, Forever 21 filed for Chapter 11 bankruptcy protection in 2019. In February 2020, it was sold for $81 million to a consortium led by real estate firm Simon Property Group.

The Changs were once icons of Korean-American success. In 2013, they ranked 5th on the LA Business Journal’s list of LA County’s wealthiest individuals with a net worth of $5.35 billion. Earlier, Forbes’ “2011 America’s 400 Richest” list placed them at 88th with a fortune of $3.6 billion.

Meanwhile, Catalyst Brands, which has managed Forever 21 since the consortium acquisition, plans to close over 200 U.S. stores to restore financial health and seek potential buyers. This process will involve laying off nearly 700 employees across California and Pennsylvania, including 358 at the LA headquarters. At the Forever 21 headquarters in LA’s Fashion District, executives, designers, supply chain managers, product developers, and store operations staff are among those facing layoffs.

<Hongyong Park>