Forever 21 to lay off over 350 workers, shut down LA headquarters as store closures continue

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As news of Forever 21 store closings trickle in across the country, the clothing retailer is set to lay off over 350 employees from its Los Angeles corporate office, which it also plans to close.

The operating company of Forever 21 disclosed its plans to lay off approximately 358 employees and shut down its headquarters in a Worker Adjustment and Retraining Notification (WARN) notice obtained by Paste BN.

The layoffs and shuttering of the company's headquarters, which was first reported by the Los Angeles Daily News and Los Angeles Times, comes as Forever 21 faces financial woes while it struggles to compete with Chinese online discount retailers Shein and Temu.

Layoffs are expected to begin on April 21, according to a Feb. 14-dated WARN notice, which is submitted when employers conduct mass layoffs.

Included in the layoffs are a variety of managers, designers, supply chain directors and the company's chief financial and chief merchandising officers, the notice states. Individuals who remain employed by the company will transition to remote work after the corporate headquarters closes.

"This decision was not made lightly," a Forever 21 spokesperson said in a statement provided to Paste BN. "And we remain committed to transparency and fair treatment of our employees during this period of transition.”

The statement went on to say how the company is "looking at ways to reduce costs across our operations and optimize our store footprint."

Forever 21 has not specified how many stores it plans to shutter , but closures have already been reported in multiple states this month.

Forever 21 exploring 'potential sale'; stores announce closing plans

Forever 21's operating company told Paste BN last week it is exploring a potential sale of the chain, which comes as the company looks to avoid bankruptcy, the Wall Street Journal first reported in early February, citing anonymous sources familiar with the matter. CNBC and Bloomberg also reported the chain was considering bankruptcy.

The company added that "no final decisions have been made" as it considers next steps and the number of store closures has not been finalized.

However, several Forever 21 locations across the country have already announced plans to close their doors, including in Connecticut, California, Washington state, Pennsylvania, Idaho and North Dakota, according to local news outlets.

Forever 21 escaped Chapter 11 five years ago when mall owners Simon Property Group and Brookfield Corporation joined Authentic Brands Groups, a global brand development company, bought the fast fashion retailer out of bankruptcy and saved it from liquidation

Jamie Salter, Authentic Brands chief executive, said during a conference in 2023 that acquiring Forever 21 was "probably the biggest mistake I made."

What could be next for Forever 21?

Sarah Foss, who is head of legal at Debtwire and an expert bankruptcy lawyer, told Paste BN on Thursday that "Chapter 11 liquidation appears to be the most likely scenario for the retail chain as a going concern buyer for its U.S. assets and leases has not yet emerged."

"A liquidation would have a significant impact on shopping malls nationwide which have struggled in recent years amid a shift to online shopping, as well as on Forever 21’s store employees across the country," Foss said.

Foss also pointed out that shutting down the company's retail stores would "not mean the end of Forever 21" as Authentic Brands Group owns the brand and intellectual property, which may not be part of a potential bankruptcy liquidation.

"The intellectual property can have significant value even as distressed sales are occurring," she added.

Debtwire data shows retailers have undergone 20 Chapter 11 filings since the beginning of 2024, while 25 companies in the retail sector have had at least two bankruptcy filings since 2016, Foss said.

Contributing: Mike Snider, Paste BN