Forever 21 Bankruptcy

The Lesson To Learn From Forever 21 Bankruptcy

The saying “Customer is the King” is as true as any other Universal Truth. They can make or break an empire if they become subjects to constant ignorance. And the perfect example is Forever 21. Once among the favorite list of youth is now facing the problem of survival. The news of Forever 21 bankruptcy indicates that it has started aging. On 29th September, Sunday, the spokesperson broke the news that Forever 21 is planning to shut down its 350 stores across the world and out of it around 178 stores from the United States itself. 

It will exit operations from Asia and Europe Continent. However, Mexico and Latin America’s stores will remain unaffected. 

It was once the most demanded and popular brand in the 2000s offering beautiful designer clothes and signature styled yellow shopping bags. It serves the needs of customers between 20-40 years of age. The company plan to reposition the brand, get rid of the loss-making store and chance to grab the client’s preference once again with the filing of bankruptcy.

Once the fashion leader has filed the chapter 11 bankruptcy in Wilmington, Delaware. During this restructuring phase, the company has obtained financial help of $275 million from JPMorgan Chase and $75 million from TPG Sixth Street Partners.  

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With Forever 21’s bankruptcy, you must learn some important lessons from their mistakes.

Forever 21 Bankruptcy


A Shift in The Customer Taste

The customer always wants more and something less ordinary. If you consistently, ignore their preference and likes, then, chances of survival are minute. Now customers are more aware of the environment and care for minimizing fabric wastes, nor they are not supporting the industry where the working condition is harsh and cruel. The concept of fast fashion is raising eyebrows in the customer.

 Not Every Publicity Is Good

The current situation of Forever 21 contradicts the statement, “All publicity is good publicity”. Another reason for the failure of Forever 21 could be its bad publicity. It constantly becomes subject to many legal lawsuits. Ariana Grande sue the firm for not giving the credit of her celebrity status, likeness and promoting the brand for free. Even designer Mara Hoffman once alleged brand for duplication of her work. The list of allegations and blame is quite long in the name of the Forever brand.

Success and Expansion Cannot Come With a Blink

Every organization dream to build an empire like no one. To spread the business globally, the company has more than 700 stores across the globe. While the average size of the store is 38000 square feet which cost to $247,000 for rent. With the aggressive business, the approach comes the trap of debt. The high operational cost adds a burden to the profit and loss statement.

Customer Want Original

The fast-fashion concept is affecting the growth and future of the brand on a large scale. Within 24 hours, the duplicate or replicate design availability makes it more vulnerable. Why will customers come to your store if the same product is available at less price? So it becomes another reason for not getting satisfactory turnout.

Forever 21 Bankruptcy


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We hope that the entrepreneurs have learned the lesson from Forever 21 Bankruptcy. For all finance related queries and difficulty, keep coming to the FinanceShed. Here you will get the best financial advice from the experts.