As Forever 21 announces store closures nationwide, the company is preparing to lay off more than 350 employees from its Los Angeles corporate office, which is also slated for closure. This move has raised concerns about the future of the popular fashion retailer.
According to a Worker Adjustment and Retraining Notification (WARN) notice obtained by USA TODAY, Forever 21’s operating company is set to lay off around 358 employees and shut down its headquarters. The decision to downsize comes as Forever 21 grapples with financial challenges in the face of stiff competition from online discount retailers like Shein and Temu.
The layoffs are scheduled to commence on April 21, as stated in the WARN notice dated February 14. The affected employees include managers, designers, supply chain directors, as well as the company’s chief financial and chief merchandising officers. Those remaining with the company will transition to remote work once the corporate headquarters ceases operations.
In a statement to USA TODAY, a spokesperson for Forever 21 emphasized that the decision was made thoughtfully, with a commitment to treating employees fairly during this transitional period. The company is also exploring cost-cutting measures and optimizing its store network.
While the exact number of store closures has not been disclosed, reports indicate that multiple locations have already shut down in various states. The company’s operating entity is reportedly considering a potential sale to avoid bankruptcy, though no final decisions have been reached.
As industry experts speculate on the future of Forever 21, the possibility of a Chapter 11 liquidation looms large. This outcome could have far-reaching implications for shopping malls and employees nationwide, underscoring the challenges faced by traditional retailers in an increasingly digital landscape.
The article also mentioned that the closure of the company’s retail stores would not signify the demise of Forever 21, as Authentic Brands Group holds ownership of the brand and its intellectual property, which might not be subject to potential liquidation in case of bankruptcy. “The intellectual property could retain significant value even amidst distressed sales,” she elaborated. According to data from Debtwire, there have been 20 Chapter 11 filings by retailers since the onset of 2024, with 25 retail companies experiencing at least two bankruptcy filings since 2016, as noted by Foss. This information was contributed by Mike Snider of USA TODAY. This article was originally published on USA TODAY: Forever 21 to lay off 358 workers, close headquarters; store closures persist.
