Executive Summary of Forever 21

FOREVER 21
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Executive Summary
Forever 21 is an American fast-fashion retailer. It has its headquarters in Los Angeles, California, United States. Forever 21 was founded in 1984 and had 815 stores in 57 countries. The company has been known for selling trendy and cheap clothing for the past years. Nevertheless, the company has recently filed for bankruptcy because of being hit by stiff competition from online selling companies, such as Amazon. Also, the company has lost influence in its customers as its competitors, such as Zara of Spain and H&M of Canada, have been providing affordable styles as those on designer runways. Other companies, such as Toy ‘R’ Us and Sears Holdings Corp, have also been filing for bankruptcy since 2017 because many customers have opted to shop online rather than in physical malls.
Also, the company is said to have been doing nothing to differentiate itself from its competitors, as noted by the founder of A-Line Panthers, a retail research firm, Gabriella Santaniello. Therefore, Forever 21 has not been able to withstand the rising competition in the market. As a result, the company’s sells have dropped drastically and have resolved to close some of its stores like 178 stores in the United States, and its Canadian subsidiary has also resolved to file for bankruptcy and is closing down 44 stores. It has been noted that the company sold its clothes at low prices and was operating at extremely large stores. This is said to be the cause of the financial trouble of the company. The company has been battling to reducing the operating costs, but it should also consider working on its prices.
Background Information
The company has been restructuring under Chapter 11 bankruptcy protection. The company has been burdened by expensive leases on their large stores, which according to Jane Hali of Jane Hali and Associates research firm, were not reasonable. Jane Hali notes that the large stores were the main factor that influenced the company’s downfall. It has been noted that the company spends $450 million on occupancy costs in the 549 United Stores and 251 in other countries. The company has revealed that it will close most of its stores in Europe and Asia to cut down the cost. Nevertheless, it has confirmed that it will continue operating in Latin America and Mexico. The company has been out to provide differentiated brands from their competitors has made them survive in the...