Iconic retail chain Forever 21 announced it is closing its Los Angeles corporate headquarters, adding another corporate exit from Southern California.
Bloomberg reports the company is expected to close hundreds of stores and file for bankruptcy.
Forever 21, a pioneer in fast fashion with its namesake stores providing affordable fashion items and accessories, enjoyed explosive growth in the first decades of its existence before facing challenges due to reports on toxic metal in its jewelry and labor rights issues.
Despite revenue in the billions of dollars in annual revenue during the 2010s, the founding Chang family sold Forever 21 to Authentic Brands and other buyers for just $81 million in 2020.
Analysts point to fierce competition from Chinese fast fashion giants like Shein and Temu as a key factor.
“Shein and Temu … mostly rely on Chinese suppliers, and they’re able to offer low prices in part because of the method they use to get their products from those suppliers to shoppers. By shipping individual orders directly to customers, they avoid US import duties, which are waived if a shipment’s value is less than US$800,” wrote global investment firm Harding Loevner. “US lawmakers have called this an unfair advantage over American retailers, many of which do pay import duties to bring in inventory made overseas.”
With Forever 21 now facing bankruptcy, the rise of these online-only competitors highlights a seismic shift in the retail and commercial real estate landscape, which is already struggling with high vacancy rates.
