WEBVTT 00:00:00.000 --> 00:00:01.980 If you grew up in America at any time between, 00:00:02.060 --> 00:00:04.440 say, the release of Clueless and the rise of 00:00:04.440 --> 00:00:08.140 TikTok, so roughly 1995 to 2015, I can almost 00:00:08.140 --> 00:00:10.519 guarantee you have a very specific sense memory 00:00:10.519 --> 00:00:14.169 etched into your brain. It's not a song. And 00:00:14.169 --> 00:00:16.710 it's not a movie quote. It's a color. A bright, 00:00:16.829 --> 00:00:20.149 unapologetic, crinkly, canary yellow. The bag. 00:00:20.309 --> 00:00:21.969 You're talking about the bag. I am talking about 00:00:21.969 --> 00:00:24.609 the yellow plastic bag from Forever 21. At the 00:00:24.609 --> 00:00:26.609 bottom of that bag, there was always that verse, 00:00:26.829 --> 00:00:30.850 John 3 .16, printed in tiny letters. But inside 00:00:30.850 --> 00:00:34.189 the bag. Absolute chaos. Total chaos. A sequined 00:00:34.189 --> 00:00:38.270 skirt for $12. A graphic tee that made no sense. 00:00:38.469 --> 00:00:40.549 Maybe a pair of sunglasses that would, you know, 00:00:40.549 --> 00:00:42.689 break in three days. It was ubiquitous. For a 00:00:42.689 --> 00:00:45.289 solid two decades, that yellow bag was a status 00:00:45.289 --> 00:00:48.270 symbol. Not of wealth, obviously, but of participation. 00:00:48.750 --> 00:00:50.909 Yes. If you were walking through a mall, a high 00:00:50.909 --> 00:00:52.929 school hallway, or a college campus with that 00:00:52.929 --> 00:00:55.329 bag, you were signaling that you were part of 00:00:55.329 --> 00:00:57.450 the fast fashion revolution. Yeah. You had the 00:00:57.450 --> 00:00:59.490 trend, and you got it for the price of a sandwich. 00:00:59.820 --> 00:01:01.880 Exactly. It was the thrill of the hunt. You'd 00:01:01.880 --> 00:01:04.120 walk into this massive thumping store music, 00:01:04.400 --> 00:01:07.379 blasting at club levels closed, piled on tables 00:01:07.379 --> 00:01:11.120 like a rummage sale, and you dig. But here is 00:01:11.120 --> 00:01:14.060 the reality check, and it is a harsh one. As 00:01:14.060 --> 00:01:17.859 of May 2025, that physical experience is gone, 00:01:18.099 --> 00:01:20.700 completely erased from the United States landscape. 00:01:21.120 --> 00:01:23.280 It really is the end of an era. And I want to 00:01:23.280 --> 00:01:26.000 be clear about what gone means here. We aren't 00:01:26.000 --> 00:01:28.099 just talking about a downsizing. No. We mean 00:01:28.099 --> 00:01:30.120 the physical footprint in the U .S. has been 00:01:30.120 --> 00:01:33.260 wiped clean. We're talking about a company that 00:01:33.260 --> 00:01:36.799 once had global sales peaking at $4 .4 billion. 00:01:37.260 --> 00:01:40.120 $4 .4 billion. A company that seemed absolutely 00:01:40.120 --> 00:01:42.519 invincible, like the cockroach of the retail 00:01:42.519 --> 00:01:45.359 world. It could survive anything. Until it couldn't. 00:01:45.359 --> 00:01:47.579 And that is what we're unpacking today. This 00:01:47.579 --> 00:01:49.819 isn't just a story about a store closing. If 00:01:49.819 --> 00:01:51.439 you're listening to this and thinking, who cares? 00:01:51.599 --> 00:01:53.959 It's cheap. clothes you are missing the bigger 00:01:53.959 --> 00:01:57.120 picture you really are this is a deep dive into 00:01:57.120 --> 00:02:00.260 a cultural phenomenon how does a company start 00:02:00.260 --> 00:02:02.900 with eleven thousand dollars in savings literally 00:02:02.900 --> 00:02:06.420 the price of a used honda civic grow into a global 00:02:06.420 --> 00:02:09.090 empire and then crash and burn into bankruptcy 00:02:09.090 --> 00:02:12.689 not once, but twice in six years. It's a trajectory 00:02:12.689 --> 00:02:15.229 that perfectly maps the rise and fall of the 00:02:15.229 --> 00:02:18.210 fast fashion model itself. We have a massive 00:02:18.210 --> 00:02:20.090 stack of source material to get through today. 00:02:20.250 --> 00:02:22.009 We do. We're looking at the complete timeline 00:02:22.009 --> 00:02:24.710 from the founding in Highland Park, Los Angeles 00:02:24.710 --> 00:02:28.110 in 1984, all the way to the final liquidation 00:02:28.110 --> 00:02:31.550 sales in March and April of 2025. And finally, 00:02:31.650 --> 00:02:34.710 it's strange zombie -like resurrection online 00:02:34.710 --> 00:02:36.430 later that year. We're going to get into the 00:02:36.430 --> 00:02:38.360 business. models the lawsuits oh man the lawsuits 00:02:38.360 --> 00:02:40.759 are absolutely wild from ariana grande to adobe 00:02:40.759 --> 00:02:43.219 photoshop and the supply chain secrets right 00:02:43.219 --> 00:02:45.699 but i think to really understand how big this 00:02:45.699 --> 00:02:47.500 collapse is we have to go back to the beginning 00:02:47.500 --> 00:02:50.199 because before it was a global giant eating up 00:02:50.199 --> 00:02:53.300 mall space it was just a tiny humble shop called 00:02:53.300 --> 00:02:56.159 fashion 21 that's right and the story starts 00:02:56.159 --> 00:02:58.500 with the classic american dream narrative but 00:02:58.500 --> 00:03:01.180 with a level of hustle that is honestly exhausting 00:03:01.180 --> 00:03:03.819 just to read about It really is. The founders, 00:03:04.000 --> 00:03:06.500 Do Won Chang and Jin Suk Chang, were immigrants 00:03:06.500 --> 00:03:08.900 from South Korea. They arrived in Los Angeles 00:03:08.900 --> 00:03:12.180 in 1981 and they didn't exactly land with a golden 00:03:12.180 --> 00:03:15.039 parachute. No, I read about Do Won Chang's early 00:03:15.039 --> 00:03:17.479 years. He was working three jobs at the same 00:03:17.479 --> 00:03:20.400 time. He was a janitor. He pumped gas and he 00:03:20.400 --> 00:03:22.560 worked in a coffee shop. That is the definition 00:03:22.560 --> 00:03:25.280 of grinding. It is. And while he was pumping 00:03:25.280 --> 00:03:27.659 gas, he noticed something. He noticed that the 00:03:27.659 --> 00:03:29.780 people driving the nicest cars, the Mercedes, 00:03:29.939 --> 00:03:32.759 the BMWs, were all in the garment business. Ah, 00:03:32.840 --> 00:03:34.620 there it is. That was his light bulb moment. 00:03:34.960 --> 00:03:37.360 Fashion wasn't just about clothes. It was about 00:03:37.360 --> 00:03:40.330 upward mobility. So they scraped together $11 00:03:40.330 --> 00:03:44.069 ,000 in savings. Which, even in 1984 dollars, 00:03:44.469 --> 00:03:47.310 is not a lot of capital to start a retail empire. 00:03:47.610 --> 00:03:50.389 Yeah. Just for inflation, that's maybe $30 ,000 00:03:50.389 --> 00:03:52.469 today? About that, yeah. You can burn through 00:03:52.469 --> 00:03:55.169 that in a month of rent in L .A. now. Easily. 00:03:55.409 --> 00:03:58.990 But they made it work. On April 16, 1984, they 00:03:58.990 --> 00:04:02.430 opened that first store. It was at 5637 North 00:04:02.430 --> 00:04:04.629 Figueroa Street in the Highland Park District. 00:04:05.050 --> 00:04:07.169 And it wasn't a massive flagship. It was 900 00:04:07.169 --> 00:04:09.810 square feet. To give you a visual, that is smaller 00:04:09.810 --> 00:04:12.030 than many two -bedroom apartments. And originally, 00:04:12.169 --> 00:04:14.069 they weren't trying to take over the world, right? 00:04:14.169 --> 00:04:16.689 Their focus was much smaller. Correct. The initial 00:04:16.689 --> 00:04:18.629 business model was actually quite localized. 00:04:19.050 --> 00:04:21.930 They were sourcing designs that were popular 00:04:21.930 --> 00:04:24.610 in South Korea and bringing them to the Korean 00:04:24.610 --> 00:04:27.269 -American community in Los Angeles. So a niche 00:04:27.269 --> 00:04:30.170 audience. A total niche play. They were buying 00:04:30.170 --> 00:04:32.610 merchandise at wholesale closeouts, getting the 00:04:32.610 --> 00:04:34.980 best deals they could find, and selling it. at 00:04:34.980 --> 00:04:37.399 a slight markup. But clearly the appeal went 00:04:37.399 --> 00:04:40.399 way beyond just that one community because the 00:04:40.399 --> 00:04:42.899 numbers for that first year are staggering. I 00:04:42.899 --> 00:04:44.279 had to double check this when I saw it in the 00:04:44.279 --> 00:04:46.379 notes. They are unbelievable. And that first 00:04:46.379 --> 00:04:50.399 year of operation, that tiny 900 square foot 00:04:50.399 --> 00:04:55.480 store pulled in $700 ,000 in sales. $700 ,000 00:04:55.480 --> 00:04:58.560 from an $11 ,000 investment. That is the moment 00:04:58.560 --> 00:05:00.079 where you go, OK, we're on to something here. 00:05:00.180 --> 00:05:02.920 Absolutely. That's almost $800 per square foot. 00:05:03.470 --> 00:05:06.389 That is Apple store levels of density, but with 00:05:06.389 --> 00:05:09.829 polyester shirts. Precisely. That was the aha 00:05:09.829 --> 00:05:13.709 moment. They realized this concept had mass appeal. 00:05:13.930 --> 00:05:16.589 It wasn't just Korean Americans who wanted cool, 00:05:16.649 --> 00:05:20.250 affordable clothes. Everyone did. So they changed 00:05:20.250 --> 00:05:24.529 the name from Fashion 21 to Forever 21. Ah, the 00:05:24.529 --> 00:05:26.829 rebrand. And this is where the strategy shifted 00:05:26.829 --> 00:05:31.290 from local community store to fast fashion disruptor. 00:05:31.550 --> 00:05:34.269 They began opening new stores at a breakneck 00:05:34.269 --> 00:05:37.189 pace on average. A new store every six months. 00:05:37.370 --> 00:05:39.529 Every six months. That is incredibly aggressive 00:05:39.529 --> 00:05:42.250 for a new business, especially one that was family 00:05:42.250 --> 00:05:44.970 owned and not swimming in venture capital money. 00:05:45.189 --> 00:05:47.209 It was all about cash flow. They were reinvesting 00:05:47.209 --> 00:05:49.250 everything. And unlike a lot of their competitors 00:05:49.250 --> 00:05:51.410 at the time, think about the mall in the 90s. 00:05:51.410 --> 00:05:54.410 You had Wet Seal, Contempo Casuals, 579. Oh yeah, 00:05:54.490 --> 00:05:56.310 I remember those. Those stores were strictly 00:05:56.310 --> 00:05:58.649 for teenagers. If you were over 22, you felt 00:05:58.649 --> 00:06:00.790 weird walking in there. The Changs did something 00:06:00.790 --> 00:06:02.670 different. They targeted the whole family. Right, 00:06:02.730 --> 00:06:04.189 they wanted everybody. They wanted the mom, the 00:06:04.189 --> 00:06:06.250 dad, and the kids. And to do that, they needed 00:06:06.250 --> 00:06:08.610 space. Right, because I remember Forever 21s 00:06:08.610 --> 00:06:11.089 being huge, like confusingly huge. You could 00:06:11.089 --> 00:06:13.069 get lost in there. There were different levels, 00:06:13.230 --> 00:06:16.470 weird annexes. That became their signature. The 00:06:16.470 --> 00:06:19.029 average store size eventually grew to 38 ,000 00:06:19.029 --> 00:06:21.850 square feet. But in the early 2000s, they made 00:06:21.850 --> 00:06:24.769 a move that really signaled their ambition. In 00:06:24.769 --> 00:06:28.329 2005, they acquired a chain called Gadzooks. 00:06:28.720 --> 00:06:32.019 Oh, wow. Gadzooks. That is a blast from the past. 00:06:32.100 --> 00:06:33.740 I definitely bought a puka shell necklace there 00:06:33.740 --> 00:06:37.500 in 2001. We all did. But by 2005, Gadzooks was 00:06:37.500 --> 00:06:40.779 bankrupt. Forever 21 bought the chain for $33 00:06:40.779 --> 00:06:44.100 million. Now, here's the key business insight. 00:06:44.540 --> 00:06:46.420 They didn't buy it because they loved the name 00:06:46.420 --> 00:06:48.379 Gadzooks or because they wanted their inventory. 00:06:48.680 --> 00:06:49.980 They wanted the real estate. They bought it for 00:06:49.980 --> 00:06:52.399 the leases. Exactly. By buying Gadzooks out of 00:06:52.399 --> 00:06:55.040 bankruptcy, they instantly acquired 150 locations 00:06:55.040 --> 00:06:57.420 in malls across America. So it was a shortcut 00:06:57.420 --> 00:07:01.300 to ubiquity. A massive one. By 2006, retail analysts 00:07:01.300 --> 00:07:03.920 estimated their sales had jumped from $640 million 00:07:03.920 --> 00:07:07.199 to $1 billion. They essentially bought their 00:07:07.199 --> 00:07:09.360 way into every major mall in the country overnight. 00:07:09.660 --> 00:07:11.759 So they're taking over the physical space. They're 00:07:11.759 --> 00:07:15.069 replacing these dying brands. And they started 00:07:15.069 --> 00:07:17.569 building these massive showcase stores. I read 00:07:17.569 --> 00:07:20.170 about the one in Pasadena, 40 ,000 square feet. 00:07:20.310 --> 00:07:24.110 Yes. Opened in 2006. It had everything. Accessories, 00:07:24.129 --> 00:07:27.269 lingerie, men's, children's. They were positioning 00:07:27.269 --> 00:07:29.990 themselves as a department store for the young 00:07:29.990 --> 00:07:31.910 and trendy. A department store. That's a good 00:07:31.910 --> 00:07:33.730 way to put it. And you have to remember the context. 00:07:34.149 --> 00:07:36.569 2008 comes around. The Great Recession hits. 00:07:36.949 --> 00:07:39.470 Most retailers are panicking. People are stopping 00:07:39.470 --> 00:07:44.129 spending. But... Forever 21. They thrived. The 00:07:44.129 --> 00:07:46.649 Chicago Tribune reported they were going gangbusters. 00:07:46.910 --> 00:07:48.689 Gangbusters. You don't hear that word enough 00:07:48.689 --> 00:07:50.689 in business reporting anymore, but it makes sense, 00:07:50.750 --> 00:07:53.329 right? In a recession, people still want to shop, 00:07:53.529 --> 00:07:55.810 but they can't afford Abercrombie or Banana Republic 00:07:55.810 --> 00:07:58.750 anymore, so they trade down to Forever 21. Exactly. 00:07:58.930 --> 00:08:01.250 The recession actually fueled their growth. They 00:08:01.250 --> 00:08:03.829 were the cheap alternative. So we enter what 00:08:03.829 --> 00:08:06.689 you call the golden era. This is roughly 2010 00:08:06.689 --> 00:08:10.360 to 2015. Forever 21 is everywhere. The music 00:08:10.360 --> 00:08:12.500 is loud, the clothes are cheap, and the sales 00:08:12.500 --> 00:08:14.980 are astronomical. And this is when they hit that 00:08:14.980 --> 00:08:18.399 peak number, right? By 2015, global sales hit 00:08:18.399 --> 00:08:22.860 that record high of $4 .4 billion. And even a 00:08:22.860 --> 00:08:25.500 few years before that, in 2011, their assets 00:08:25.500 --> 00:08:29.540 were $1 .4 billion with $124 million in profit. 00:08:29.699 --> 00:08:32.039 And amazingly, the family kept control this whole 00:08:32.039 --> 00:08:35.179 time. No IPO. No IPO. The Changs didn't take 00:08:35.179 --> 00:08:37.480 the company public. It was a very tightly controlled 00:08:37.480 --> 00:08:40.100 family operation. Their daughters, Linda and 00:08:40.100 --> 00:08:43.149 Esther. were in executive roles. Linda ran marketing, 00:08:43.370 --> 00:08:45.570 Esther was in merchandising. So it was a tight 00:08:45.570 --> 00:08:47.950 -knit operation at the top, despite being a global 00:08:47.950 --> 00:08:50.309 behemoth with hundreds of stores. A very private 00:08:50.309 --> 00:08:52.389 company, which made it hard for analysts to see 00:08:52.389 --> 00:08:54.730 inside, but the growth was undeniable. Okay, 00:08:54.769 --> 00:08:56.350 so they have the real estate, they have the family 00:08:56.350 --> 00:08:58.590 control, but let's talk about the actual product, 00:08:58.669 --> 00:09:00.509 because the defining characteristic of Forever 00:09:00.509 --> 00:09:02.929 21 wasn't quality. Let's be honest, the quality 00:09:02.929 --> 00:09:06.250 was suspect. Suspect is a kind word. The defining 00:09:06.250 --> 00:09:08.899 characteristic was speed. I remember reading 00:09:08.899 --> 00:09:10.820 that they could get a trend from the runway to 00:09:10.820 --> 00:09:13.500 the rack faster than anyone else. How did they 00:09:13.500 --> 00:09:15.720 actually pull that off? That speed was their 00:09:15.720 --> 00:09:18.840 secret weapon. But it was also a logistical marvel. 00:09:19.440 --> 00:09:22.059 The New York Times reported that while a traditional 00:09:22.059 --> 00:09:24.279 designer might take six months to get a collection 00:09:24.279 --> 00:09:27.340 from a runway show to a retail floor, Forever 00:09:27.340 --> 00:09:30.600 21 could do it in six weeks. Six weeks? Sometimes 00:09:30.600 --> 00:09:34.899 less. That is lightning fast. How does that physically 00:09:34.899 --> 00:09:37.519 happen? You have to design it, source the fabric, 00:09:37.659 --> 00:09:39.840 cut it, sew it, ship it. Well, this is where 00:09:39.840 --> 00:09:42.120 their made in L .A. roots actually helped them 00:09:42.120 --> 00:09:44.500 in the beginning. Unlike competitors who did 00:09:44.500 --> 00:09:47.700 everything in China, Forever 21 kept a lot of 00:09:47.700 --> 00:09:50.580 manufacturing local in Los Angeles for a long 00:09:50.580 --> 00:09:52.120 time. Oh, that's interesting. I didn't realize 00:09:52.120 --> 00:09:55.279 that. This allowed them to spot a trend, say 00:09:55.279 --> 00:09:58.990 the specific dress, Paris Hilton. or manufacture 00:09:58.990 --> 00:10:02.149 a few thousand units in downtown L .A. and truck 00:10:02.149 --> 00:10:04.429 them to stores within days. That's the test and 00:10:04.429 --> 00:10:06.529 repeat model, right? Exactly. They wouldn't commit 00:10:06.529 --> 00:10:08.230 to a million units. They'd make a small batch, 00:10:08.370 --> 00:10:09.929 throw it in the store, see if it sold. If it 00:10:09.929 --> 00:10:11.750 flew off the shelves, they'd ramp up production 00:10:11.750 --> 00:10:13.950 immediately. So they had a very agile supply 00:10:13.950 --> 00:10:17.429 chain. Incredibly agile. It required a very high 00:10:17.429 --> 00:10:19.870 inventory turnover. They were completely changing 00:10:19.870 --> 00:10:22.210 out their merchandise every six to eight weeks. 00:10:22.389 --> 00:10:24.789 If you saw something you liked, you had to buy 00:10:24.789 --> 00:10:26.450 it then and there because it wouldn't be there 00:10:26.450 --> 00:10:29.159 next time. Fear of missing out, weaponized as 00:10:29.159 --> 00:10:33.000 a business model. But this brings us to the controversy. 00:10:33.740 --> 00:10:36.419 Because you can't move that fast without cutting 00:10:36.419 --> 00:10:38.940 some corners. A few corners, yes. And one of 00:10:38.940 --> 00:10:41.100 the biggest questions people had was, who is 00:10:41.100 --> 00:10:44.179 designing all this stuff? Because if you're releasing 00:10:44.179 --> 00:10:46.440 thousands of new styles a month, you must have 00:10:46.440 --> 00:10:49.440 an army of designers. You would think. But the 00:10:49.440 --> 00:10:52.340 answer, controversially, was pretty much nobody. 00:10:52.909 --> 00:10:55.149 Or at least not designers in the traditional 00:10:55.149 --> 00:10:58.330 sense. What does that even mean? In 2007, the 00:10:58.330 --> 00:11:00.690 company actually admitted this publicly. They 00:11:00.690 --> 00:11:03.509 stated that they employed no designers. Instead, 00:11:03.690 --> 00:11:06.629 they used what they called very savvy designer 00:11:06.629 --> 00:11:09.610 merchants. Savvy designer merchants. That sounds 00:11:09.610 --> 00:11:11.669 like corporate speak for professional copycats. 00:11:11.970 --> 00:11:13.950 Well, that is certainly how the fashion industry 00:11:13.950 --> 00:11:16.190 interpreted it. The company claimed that they 00:11:16.190 --> 00:11:18.049 worked with many suppliers and didn't always 00:11:18.049 --> 00:11:20.690 know where the ideas originated. Come on. But 00:11:20.690 --> 00:11:23.220 the implication was clear. They weren't sitting 00:11:23.220 --> 00:11:26.259 around sketching original art. They were spotting 00:11:26.259 --> 00:11:29.480 trends, often on high fashion runways or on competitors' 00:11:29.759 --> 00:11:32.179 racks, and replicating them for the mass market 00:11:32.179 --> 00:11:34.899 immediately. But wait, isn't that illegal? I 00:11:34.899 --> 00:11:36.840 mean, if I write a book, you can't just change 00:11:36.840 --> 00:11:39.080 the character names and sell it. Why could they 00:11:39.080 --> 00:11:41.919 do that with clothes? This is a crucial distinction 00:11:41.919 --> 00:11:45.000 in U .S. copyright law. In America, you generally 00:11:45.000 --> 00:11:47.740 cannot copyright the utility of an article of 00:11:47.740 --> 00:11:51.389 clothing. You can't copyright the cut of a dress 00:11:51.389 --> 00:11:54.549 or the shape of a sleeve because clothes are 00:11:54.549 --> 00:11:57.190 considered functional items. You'd need sleeves 00:11:57.190 --> 00:11:59.049 to cover your arms. You'd need a hole for your 00:11:59.049 --> 00:12:02.549 head. The law sees that as function, not art. 00:12:02.750 --> 00:12:05.230 Okay, so the shape is fair game. Right. However, 00:12:05.490 --> 00:12:08.730 you can copyright a 2D graphic print, a logo, 00:12:08.850 --> 00:12:12.370 or a specific fabric pattern. So Forever 21 operated 00:12:12.370 --> 00:12:14.649 in this illegal gray area. They'd walk the line. 00:12:15.149 --> 00:12:17.029 They would copy the silhouette of a Diane von 00:12:17.029 --> 00:12:19.830 Furstenberg dress perfectly, but maybe change 00:12:19.830 --> 00:12:22.870 the print just enough to avoid a lawsuit. Or 00:12:22.870 --> 00:12:24.950 sometimes they wouldn't change it enough. And 00:12:24.950 --> 00:12:27.169 that leads us directly into the dark side of 00:12:27.169 --> 00:12:29.610 fast fashion. Because if you're replicating designs 00:12:29.610 --> 00:12:32.009 that fast, you're going to step on some toes. 00:12:32.190 --> 00:12:35.090 And by step on toes, I mean get sued. A lot. 00:12:35.289 --> 00:12:37.429 The legal battles were constant. It was almost 00:12:37.429 --> 00:12:40.500 a line item in their budget. By October 2007, 00:12:40.919 --> 00:12:43.720 they were facing over 20 lawsuits related to 00:12:43.720 --> 00:12:47.100 copyright infringement. Twenty. Just in one year. 00:12:47.259 --> 00:12:49.299 And the list of accusers is like a who's who 00:12:49.299 --> 00:12:51.940 of fashion. Diane von Furstenberg, Anna Sui, 00:12:52.100 --> 00:12:55.000 Gwen Stefani's Harajuku Lovers brand. I remember 00:12:55.000 --> 00:12:57.360 the Gwen Stefani One Harajuku Lovers. She had 00:12:57.360 --> 00:13:00.480 those very specific anime -style graphics. Yes, 00:13:00.480 --> 00:13:02.360 and those are 2D graphics, so they are protected. 00:13:02.679 --> 00:13:04.960 But the Travada case was the most interesting 00:13:04.960 --> 00:13:08.419 one to me. Travada was a smaller... cool contemporary 00:13:08.419 --> 00:13:11.519 label, and they claimed Forever 21 copied their 00:13:11.519 --> 00:13:13.399 designs button for button. And they took them 00:13:13.399 --> 00:13:15.480 to court. They actually took Forever 21 to a 00:13:15.480 --> 00:13:17.679 jury trial. Which almost never happens, right? 00:13:17.779 --> 00:13:20.259 Yeah. Usually these things settle out of court 00:13:20.259 --> 00:13:22.279 because the big company just pays the little 00:13:22.279 --> 00:13:24.980 company to go away. Exactly. But Travato wanted 00:13:24.980 --> 00:13:27.980 to make a point. It resulted in a mistrial initially, 00:13:28.240 --> 00:13:31.120 but they settled before a retrial. But the evidence 00:13:31.120 --> 00:13:33.840 they showed was damning emails, side -by -side 00:13:33.840 --> 00:13:36.440 comparisons, where even the stitching quirks 00:13:36.440 --> 00:13:39.299 were identical. It showed that designers were 00:13:39.299 --> 00:13:41.360 getting fed up. And it wasn't just clothing designs. 00:13:41.950 --> 00:13:45.350 In 2019, Ariana Grande sued them for $10 million. 00:13:45.970 --> 00:13:47.850 And this wasn't about a song. It was about her 00:13:47.850 --> 00:13:50.610 face. This is the right of publicity issue. Yeah. 00:13:50.750 --> 00:13:53.570 Ariana Grande accused them of using a lookalike 00:13:53.570 --> 00:13:56.169 model dressed exactly like her in the Seven Rings 00:13:56.169 --> 00:13:58.929 music video to promote their clothes. Hey, let's 00:13:58.929 --> 00:14:00.570 unpack right of publicity. Is that like copyright? 00:14:00.769 --> 00:14:03.149 It's different. Copyright protects what you create. 00:14:03.289 --> 00:14:05.570 Right of publicity protects who you are, your 00:14:05.570 --> 00:14:07.629 name, your image, your likeness. It's why you 00:14:07.629 --> 00:14:09.450 can't just put Taylor Swift's face on a billboard 00:14:09.450 --> 00:14:11.330 to sell tires without her permission. Got it. 00:14:11.759 --> 00:14:14.279 Ariana argued that by hiring a model who looked 00:14:14.279 --> 00:14:17.059 like her, dressed like her, and posed like her, 00:14:17.559 --> 00:14:20.000 Forever 21 was tricking consumers into thinking 00:14:20.000 --> 00:14:22.879 she endorsed the brand. That is bold. It's one 00:14:22.879 --> 00:14:25.360 thing to copy a dress. It's another to copy a 00:14:25.360 --> 00:14:27.620 pop star's entire existence for an ad campaign. 00:14:28.120 --> 00:14:30.460 But there was another lawsuit that I found absolutely 00:14:30.460 --> 00:14:32.960 mind -boggling. And it wasn't about clothes or 00:14:32.960 --> 00:14:35.820 pop stars. It was about software. Oh, the Adobe 00:14:35.820 --> 00:14:38.419 case. This one peels back the curtain on their 00:14:38.419 --> 00:14:40.580 internal operations in a way that is, frankly, 00:14:40.679 --> 00:14:43.070 shocking. for a company of their size. Tell me 00:14:43.070 --> 00:14:46.490 about this. In 2015, Adobe, Autodesk, and Corel 00:14:46.490 --> 00:14:49.450 filed a joint lawsuit. They accused Forever 21 00:14:49.450 --> 00:14:52.549 of using pirated versions of Photoshop, AutoCAD, 00:14:52.649 --> 00:14:54.769 and PaintShop Pro. Wait, pause on that. We are 00:14:54.769 --> 00:14:57.190 talking about a company making $4 billion in 00:14:57.190 --> 00:14:59.950 revenue, and they were allegedly using cracked 00:14:59.950 --> 00:15:02.830 versions of Photoshop, like a broke college student 00:15:02.830 --> 00:15:05.009 trying to make a meme. That was the allegation. 00:15:05.360 --> 00:15:07.659 They claimed they found instances of Forever 00:15:07.659 --> 00:15:10.139 21 using serial numbers that had been key generated 00:15:10.139 --> 00:15:12.679 illegally. Adobe claimed they were bullying them 00:15:12.679 --> 00:15:14.840 over licensing fees, but the software company 00:15:14.840 --> 00:15:17.700 said, no, you're using unlicensed copies to design 00:15:17.700 --> 00:15:20.279 your store layouts and retouch your photos. That 00:15:20.279 --> 00:15:23.679 just screams frugality gone wrong. It paints 00:15:23.679 --> 00:15:25.700 a picture of a company that was trying to cut 00:15:25.700 --> 00:15:28.480 costs at absolutely every level. even when it 00:15:28.480 --> 00:15:30.559 made no sense. And when you say every level, 00:15:30.600 --> 00:15:33.179 sadly, that includes the people working on the 00:15:33.179 --> 00:15:35.419 floor and in the factories. Right. We have to 00:15:35.419 --> 00:15:37.299 talk about the labor issues, because this is 00:15:37.299 --> 00:15:40.620 a huge dark cloud over the Forever 21 story. 00:15:40.980 --> 00:15:43.000 It really is. Yeah, this is where the American 00:15:43.000 --> 00:15:45.860 dream narrative gets really complicated, because 00:15:45.860 --> 00:15:48.019 while the Changs were succeeding, the people 00:15:48.019 --> 00:15:50.740 making the clothes were struggling. In 2001, 00:15:50.940 --> 00:15:53.399 there was a landmark lawsuit filed by the Asian 00:15:53.399 --> 00:15:56.259 Pacific American Legal Center. They represented 00:15:56.259 --> 00:15:59.240 19 gar - workers in Los Angeles who claimed they 00:15:59.240 --> 00:16:01.259 were being paid less than minimum wage and working 00:16:01.259 --> 00:16:03.720 in sweatshop like conditions. Sweatshop conditions 00:16:03.720 --> 00:16:06.600 in L .A. Yes. We're talking about people sewing 00:16:06.600 --> 00:16:09.620 Forever 21 shirts for pennies per piece, ending 00:16:09.620 --> 00:16:12.340 up with wages far below the legal limit. And 00:16:12.340 --> 00:16:15.039 Forever 21's defense was basically it wasn't 00:16:15.039 --> 00:16:18.580 us, right? They tried to create distance. Standard 00:16:18.580 --> 00:16:22.059 industry defense. They argued we don't employ 00:16:22.059 --> 00:16:25.049 these sewers. We hire a manufacturer and that 00:16:25.049 --> 00:16:27.950 manufacturer hires the sewers. If the manufacturer 00:16:27.950 --> 00:16:31.169 breaks the law, that's not on us. Which is legally 00:16:31.169 --> 00:16:34.090 convenient but ethically dubious when you're 00:16:34.090 --> 00:16:37.049 the one demanding the shirt be made for $3. Exactly. 00:16:37.409 --> 00:16:40.289 The lawsuit led to a three -year boycott and 00:16:40.289 --> 00:16:42.509 a documentary called Made in L .A., which was 00:16:42.509 --> 00:16:44.850 very damaging to their reputation. Did they change 00:16:44.850 --> 00:16:46.730 anything after that? They eventually settled 00:16:46.730 --> 00:16:49.669 in 2004 and agreed to take steps to ensure their 00:16:49.669 --> 00:16:52.580 contractors were obeying the law. But the labor 00:16:52.580 --> 00:16:55.120 issues didn't stop at the factories. The SOAR 00:16:55.120 --> 00:16:57.080 employees, the ones in the malls, had their own 00:16:57.080 --> 00:17:00.059 battles. The bag check lawsuit. This one makes 00:17:00.059 --> 00:17:02.159 my blood boil a little bit. It's a classic case 00:17:02.159 --> 00:17:05.500 of wage theft. In 2012, employees filed a class 00:17:05.500 --> 00:17:08.619 action lawsuit. Basically, Forever 21 required 00:17:08.619 --> 00:17:11.200 employees to have their bags checked before they 00:17:11.200 --> 00:17:13.259 left the store to ensure they weren't stealing 00:17:13.259 --> 00:17:15.339 merchandise. Which is, you know, understandable 00:17:15.339 --> 00:17:17.579 for a retailer. Sure, but they made them clock 00:17:17.579 --> 00:17:20.380 out before the bag check. So employees were standing 00:17:20.380 --> 00:17:23.259 in line for 10, 20, sometimes 30 minutes unpaid, 00:17:23.339 --> 00:17:25.799 waiting to be allowed to go home. That is just 00:17:25.799 --> 00:17:28.299 treating your employees like suspects and stealing 00:17:28.299 --> 00:17:30.980 their time. If you require me to be there, you 00:17:30.980 --> 00:17:33.400 have to pay me. It's simple. The courts generally 00:17:33.400 --> 00:17:36.480 agree, but it reinforced this image of a company 00:17:36.480 --> 00:17:40.039 that viewed its workforce as a cost to be minimized 00:17:40.039 --> 00:17:42.519 rather than an asset. And it wasn't just wage 00:17:42.519 --> 00:17:45.190 theft. There were safety issues, too. On top 00:17:45.190 --> 00:17:47.950 of that, you had OSHA fines for safety hazards. 00:17:48.190 --> 00:17:51.849 We're talking blocked exits, boxes piled dangerously 00:17:51.849 --> 00:17:55.150 high, fines in excess of $100 ,000 for stores 00:17:55.150 --> 00:17:57.809 in New Jersey and Manhattan. It paints a picture 00:17:57.809 --> 00:18:00.609 of a chaotic operational environment where speed 00:18:00.609 --> 00:18:03.450 and volume took precedence over safety and protocol. 00:18:03.750 --> 00:18:05.569 They were just moving too fast. But it wasn't 00:18:05.569 --> 00:18:07.490 just legal and labor stuff. They had some major 00:18:07.490 --> 00:18:10.390 PR blunders, too. Oh, absolutely. They had a 00:18:10.390 --> 00:18:12.430 real knack for stepping in it. I remember the 00:18:12.430 --> 00:18:14.859 allergic to algebra shirt. Algebra shirt. Yes. 00:18:14.960 --> 00:18:16.740 They sold a shirt that just said allergic to 00:18:16.740 --> 00:18:20.339 algebra and it got slammed for being anti -education 00:18:20.339 --> 00:18:22.799 and frankly sexist because it was targeted at 00:18:22.799 --> 00:18:24.759 young girls. Not a great look. And then there 00:18:24.759 --> 00:18:27.960 was the diet bar incident in 2019. That was a 00:18:27.960 --> 00:18:30.500 real head scratcher. People who ordered plus 00:18:30.500 --> 00:18:33.099 -size clothing online started receiving free 00:18:33.099 --> 00:18:35.920 Atkins diet bars in their packages. You cannot 00:18:35.920 --> 00:18:38.859 make this up. The backlash was immediate and 00:18:38.859 --> 00:18:41.779 intense. People accused them of fat shaming their 00:18:41.779 --> 00:18:44.740 own customers. Forever 21 put out a statement 00:18:44.740 --> 00:18:47.319 calling it an oversight and said the bars were 00:18:47.319 --> 00:18:50.099 part of a promotion set with all online orders, 00:18:50.180 --> 00:18:52.740 but... The optics were terrible. It's just so 00:18:52.740 --> 00:18:55.359 tone -deaf. And didn't they try to sue a blogger 00:18:55.359 --> 00:18:57.960 who was making fun of them? Yes. This is my favorite 00:18:57.960 --> 00:19:00.940 one. A blogger named Rachel Kane started a site 00:19:00.940 --> 00:19:04.519 called wtforever21 .com where she just poked 00:19:04.519 --> 00:19:07.420 fun at their more ridiculous items. The company 00:19:07.420 --> 00:19:09.359 sent her a cease and desist, threatening to sue 00:19:09.359 --> 00:19:11.849 her. How did that work out for them? It backfired 00:19:11.849 --> 00:19:13.529 spectacularly. It caused a stray sand effect. 00:19:13.710 --> 00:19:15.849 The media picked up the story. The blog got a 00:19:15.849 --> 00:19:17.930 million times more traffic and Forever 21 ended 00:19:17.930 --> 00:19:20.069 up looking like a bully. They eventually backed 00:19:20.069 --> 00:19:22.369 down. It seems like a pattern. They were fighting 00:19:22.369 --> 00:19:25.789 on so many fronts, legal, labor, safety, PR, 00:19:26.069 --> 00:19:28.250 while trying to maintain this breakneck speed. 00:19:28.690 --> 00:19:31.109 And eventually the wheels started to come off. 00:19:31.269 --> 00:19:33.150 They really did. Let's move to the beginning 00:19:33.150 --> 00:19:35.829 of the end. The first collapse. This is around 00:19:35.829 --> 00:19:38.970 2018 and 2019. To understand this collapse, you 00:19:38.970 --> 00:19:41.349 have to look at the environment. This was the 00:19:41.349 --> 00:19:46.079 peak of the so -called retail apocalypse. Malls 00:19:46.079 --> 00:19:49.180 were suffering. Foot traffic was down. People 00:19:49.180 --> 00:19:52.200 were shopping on Amazon. And Forever 21 was all 00:19:52.200 --> 00:19:54.619 in on malls. They were particularly vulnerable 00:19:54.619 --> 00:19:56.599 because of those massive stores we mentioned 00:19:56.599 --> 00:19:59.559 earlier. The anchor tenant strategy backfired. 00:19:59.700 --> 00:20:02.140 So the thing that made them successful was now 00:20:02.140 --> 00:20:04.500 a weakness. Spectacularly. Remember, they bought 00:20:04.500 --> 00:20:07.220 Gadzooks and expanded into 40 ,000 square foot 00:20:07.220 --> 00:20:11.000 spaces. When foot traffic drops, a 40 ,000 square 00:20:11.000 --> 00:20:13.200 foot store isn't an asset. It's a liability. 00:20:13.480 --> 00:20:15.220 You still have to pay the bills. You still have 00:20:15.220 --> 00:20:17.579 to pay rent, air conditioning and staff to cover 00:20:17.579 --> 00:20:20.000 that massive floor. But the sales per square 00:20:20.000 --> 00:20:21.839 foot were tanking. And they started pulling out 00:20:21.839 --> 00:20:23.680 of international markets, right? I read they 00:20:23.680 --> 00:20:26.000 left the Netherlands, Thailand, Ireland. Taiwan, 00:20:26.079 --> 00:20:30.200 Japan. They were retreating. In 2019, global 00:20:30.200 --> 00:20:33.400 sales plunged by 32 percent. A third of their 00:20:33.400 --> 00:20:35.759 business in one year. That is a catastrophic 00:20:35.759 --> 00:20:38.759 drop. If you lose a third of your revenue in 00:20:38.759 --> 00:20:41.140 a year when you have high fixed costs, you are 00:20:41.140 --> 00:20:44.680 in serious trouble. So in September 2019, they 00:20:44.680 --> 00:20:47.759 file for Chapter 11 bankruptcy, the first one. 00:20:47.880 --> 00:20:50.339 Right. And for listeners who aren't finance nerds, 00:20:50.339 --> 00:20:53.200 Chapter 11 is reorganization bankruptcy. It's 00:20:53.200 --> 00:20:56.900 not we're dead. It's we're broke. Please hold 00:20:56.900 --> 00:20:58.859 off the creditors while we figure this out. So 00:20:58.859 --> 00:21:00.700 what reasons did they give? What was the official 00:21:00.700 --> 00:21:03.559 story? The reasons cited were overexpansion. 00:21:03.950 --> 00:21:07.630 stores that were too big, and this is crucial, 00:21:07.809 --> 00:21:10.750 a lack of a coherent e -commerce strategy. Which 00:21:10.750 --> 00:21:12.930 is ironic, considering they were the brand for 00:21:12.930 --> 00:21:14.890 young people, you'd think they would have pioneered 00:21:14.890 --> 00:21:17.250 online shopping. Why were they so bad at it? 00:21:17.349 --> 00:21:19.529 They were addicted to the physical store. They 00:21:19.529 --> 00:21:21.509 saw themselves as a brick -and -mortar empire. 00:21:21.789 --> 00:21:23.890 Their entire model was built around the treasure 00:21:23.890 --> 00:21:26.630 hunt in the mall. By the time they tried to pivot, 00:21:26.730 --> 00:21:29.589 Amazon and ASOS were already miles ahead. They 00:21:29.589 --> 00:21:31.349 just missed it. They completely missed the boat. 00:21:31.549 --> 00:21:34.170 So the consequence of that first bankruptcy was 00:21:34.170 --> 00:21:37.130 severe. They ceased operations in 40 countries. 00:21:37.150 --> 00:21:40.450 They closed 350 of their 815 international stores. 00:21:40.710 --> 00:21:43.269 They basically retreated to their core markets, 00:21:43.549 --> 00:21:46.130 the U .S. and Latin America. It was a massive 00:21:46.130 --> 00:21:48.569 contraction. But they didn't die. They were rescued. 00:21:49.079 --> 00:21:52.180 And this brings us to the zombie phase. Who saved 00:21:52.180 --> 00:21:54.740 them? It was a consortium. In February 2020, 00:21:55.099 --> 00:21:58.400 they were sold for $81 million. Whoa, stop. $81 00:21:58.400 --> 00:22:01.119 million. You just said they had $4 .4 billion 00:22:01.119 --> 00:22:05.339 in sales a few years prior. $81 million is. That 00:22:05.339 --> 00:22:07.160 pocket change in the corporate world, that's 00:22:07.160 --> 00:22:09.480 pennies on the dollar. It was a fire sale. The 00:22:09.480 --> 00:22:12.440 value had evaporated. The buyers were Simon Property 00:22:12.440 --> 00:22:14.799 Group, Brookfield Properties, and Authentic Brands 00:22:14.799 --> 00:22:18.059 Group, or ABG. Simon and Brookfield. Those are 00:22:18.059 --> 00:22:20.819 mall owners. Exactly. And that's the key to understanding 00:22:20.819 --> 00:22:23.220 this. The landlords bought the tenant. Why would 00:22:23.220 --> 00:22:25.700 a landlord buy a failing clothing store? That 00:22:25.700 --> 00:22:27.839 seems like buying a sinking ship. Think about 00:22:27.839 --> 00:22:29.680 it from the landlord's perspective. Simon Property 00:22:29.680 --> 00:22:32.740 Group owns hundreds of malls. Forever 21 is one 00:22:32.740 --> 00:22:34.940 of their biggest tenants, occupying huge chunks 00:22:34.940 --> 00:22:37.980 of square footage. If Forever 21 liquidates and 00:22:37.980 --> 00:22:41.500 closes all those stores, Simon is left with millions 00:22:41.500 --> 00:22:43.700 of square feet of empty space that they can't 00:22:43.700 --> 00:22:47.299 fill. It would devalue the entire mall. So they 00:22:47.299 --> 00:22:50.500 bought Forever 21 essentially to pay rent to 00:22:50.500 --> 00:22:52.819 themselves. So it's a defensive move. We have 00:22:52.819 --> 00:22:55.539 to keep the store open or our mall looks dead. 00:22:56.000 --> 00:22:57.880 Precisely. It's like a taxi company investing 00:22:57.880 --> 00:23:00.240 in Uber just to keep the dispatch office open. 00:23:00.680 --> 00:23:02.839 They formed a joint venture called Sparked Group 00:23:02.839 --> 00:23:05.200 to manage it. So the landlord's on the store 00:23:05.200 --> 00:23:08.140 now. They bring in new CEOs. They try to reinvent 00:23:08.140 --> 00:23:10.480 the brand. What did that look like? Because I 00:23:10.480 --> 00:23:13.720 feel like between 2020 and 2024, I saw some very 00:23:13.720 --> 00:23:17.019 weird headlines involving Forever 21. It was 00:23:17.019 --> 00:23:18.880 a struggle for relevance. They were throwing 00:23:18.880 --> 00:23:21.099 spaghetti at the wall. They brought in Daniel 00:23:21.099 --> 00:23:24.420 Cooley as CEO, then Winnie Park. They tried partnerships 00:23:24.420 --> 00:23:26.740 to make the brand feel upscale or cool again. 00:23:26.839 --> 00:23:28.720 Right, the collab. They did a collab with Hervé 00:23:28.720 --> 00:23:31.099 Léger, which is very high -fat. known for bandage 00:23:31.099 --> 00:23:33.119 dresses and Sports Illustrated, even Barbie. 00:23:33.259 --> 00:23:35.619 And they tried to get into the metaverse. I distinctly 00:23:35.619 --> 00:23:37.880 remember getting a press release about a Roblox 00:23:37.880 --> 00:23:42.619 game. Yes. In late 2021, they hired Virtual Brand 00:23:42.619 --> 00:23:46.380 Group to create Forever 21 Shop City. In Roblox, 00:23:46.460 --> 00:23:49.220 players could operate their own Forever 21 stores. 00:23:49.640 --> 00:23:52.019 It was an attempt to connect with that Gen Z 00:23:52.019 --> 00:23:54.940 and Gen Alpha audience that they had lost. Kids 00:23:54.940 --> 00:23:56.700 aren't coming to the mall, so let's build a mall 00:23:56.700 --> 00:23:58.759 inside their computer. It wasn't the worst idea 00:23:58.759 --> 00:24:00.279 in theory, but while they were playing in the 00:24:00.279 --> 00:24:02.799 metaverse, their actual technology in the real 00:24:02.799 --> 00:24:05.539 world was failing. We have to mention the Bolt 00:24:05.539 --> 00:24:08.079 lawsuit. Oh, this is the one -click checkout 00:24:08.079 --> 00:24:11.640 disaster. A total disaster. ABG, the new part 00:24:11.640 --> 00:24:14.380 owner, sued a fintech company called Bolt Financial. 00:24:14.920 --> 00:24:17.359 Bolt had promised a revolutionary one -click 00:24:17.359 --> 00:24:20.039 checkout technology for Forever 21's app and 00:24:20.039 --> 00:24:22.220 website. And it didn't work. According to the 00:24:22.220 --> 00:24:25.259 lawsuit, the rollout was botched. ABG claimed 00:24:25.259 --> 00:24:28.160 they lost $150 million in online sales because 00:24:28.160 --> 00:24:30.779 the integration was so buggy. $150 million lost 00:24:30.779 --> 00:24:33.039 because the checkout button didn't work. That 00:24:33.039 --> 00:24:35.839 is a nightmare scenario for any retailer. ABG 00:24:35.839 --> 00:24:39.200 called it disastrous. Denied the claims, of course. 00:24:39.319 --> 00:24:41.279 But it just shows that even after the rescue, 00:24:41.440 --> 00:24:43.480 the operational side of the business was struggling 00:24:43.480 --> 00:24:45.299 to modernize. They couldn't get the basics right. 00:24:45.460 --> 00:24:48.559 And then, in August 2023, came the plot twist 00:24:48.559 --> 00:24:51.299 that nobody saw coming. The enemy entered the 00:24:51.299 --> 00:24:54.200 building. The Sheen deal. Sheen, the ultra -fast 00:24:54.200 --> 00:24:56.480 fashion giant, the company that basically looked 00:24:56.480 --> 00:24:58.740 at Forever 21's business model and said, hold 00:24:58.740 --> 00:25:00.960 my beer, I can do it faster, cheaper, and without 00:25:00.960 --> 00:25:04.339 stores. Sheen ate Forever 21's lunch, dinner, 00:25:04.730 --> 00:25:08.250 and Midnight Snack. Wow. In August 2023, Shane 00:25:08.250 --> 00:25:10.890 acquired a roughly one -third stake in Spark 00:25:10.890 --> 00:25:14.470 Group, the operator of Forever 21. Wow. It was 00:25:14.470 --> 00:25:17.150 a bizarre moment. The disruptor Forever 21 was 00:25:17.150 --> 00:25:19.569 partnering with the new disruptor Shine. It felt 00:25:19.569 --> 00:25:21.190 like a surrender. If you can't beat them, let 00:25:21.190 --> 00:25:22.730 them buy a third of you. It was an admission 00:25:22.730 --> 00:25:25.349 that the market had shifted. We had moved from 00:25:25.349 --> 00:25:28.089 fast fashion, which was mall -based, to ultra 00:25:28.089 --> 00:25:29.970 -fast fashion, which is direct -to -consumer 00:25:29.970 --> 00:25:32.420 apps like Shane and Timu. And Forever 21 was 00:25:32.420 --> 00:25:34.559 stuck in the middle. Completely stuck in the 00:25:34.559 --> 00:25:36.880 middle with expensive leases and slower production 00:25:36.880 --> 00:25:39.880 cycles, while Shane had no physical stores and 00:25:39.880 --> 00:25:43.079 used AI to predict trends instantly. And that 00:25:43.079 --> 00:25:45.539 middle turned out to be a death trap. Which brings 00:25:45.539 --> 00:25:49.279 us to 2025, the final nail in the coffin. The 00:25:49.279 --> 00:25:51.500 speed of this second collapse was startling. 00:25:51.799 --> 00:25:53.920 You'd think with Shane and Simon backing them, 00:25:54.000 --> 00:25:57.519 they'd be safe. But in February 2025, reports 00:25:57.519 --> 00:25:59.319 surfaced that they were trying to restructure 00:25:59.319 --> 00:26:01.440 again. They were talking to landlords about cutting 00:26:01.440 --> 00:26:04.019 rent. But the hole was too deep. What happened 00:26:04.019 --> 00:26:08.539 in March? March 3, 2025. A bloody Monday. They 00:26:08.539 --> 00:26:11.180 laid off 700 employees in California and Pennsylvania 00:26:11.180 --> 00:26:13.900 and announced the closure of their Los Angeles 00:26:13.900 --> 00:26:16.680 headquarters. The HQ closure is symbolic. That's 00:26:16.680 --> 00:26:18.740 where it all started. The made -in -LA dream 00:26:18.740 --> 00:26:22.369 died right there. It did. And then... Just two 00:26:22.369 --> 00:26:26.690 weeks later, on March 17, 2025, Forever 21 filed 00:26:26.690 --> 00:26:29.130 for Chapter 11 bankruptcy for the second time. 00:26:29.250 --> 00:26:31.809 But this time was different. How so? This wasn't 00:26:31.809 --> 00:26:33.509 a reorganization. There was no plan to save the 00:26:33.509 --> 00:26:35.849 stores. Why not? Why didn't Simon Property Group 00:26:35.849 --> 00:26:37.930 swoop in to save them again? They did it in 2020. 00:26:38.309 --> 00:26:40.839 The math didn't work anymore. Mall traffic had 00:26:40.839 --> 00:26:43.140 continued to decrease and the competition from 00:26:43.140 --> 00:26:46.099 Timu and Shine was just too fierce. The liabilities 00:26:46.099 --> 00:26:48.619 were listed between $1 billion and $5 billion. 00:26:48.960 --> 00:26:51.359 The assets were a fraction of that. So they were 00:26:51.359 --> 00:26:53.900 truly broke. They explicitly blamed decreasing 00:26:53.900 --> 00:26:56.819 mall traffic and competitors like Timu in the 00:26:56.819 --> 00:26:59.799 filing. Even the landlords realized that keeping 00:26:59.799 --> 00:27:02.920 these stores open was just burning money. So 00:27:02.920 --> 00:27:06.549 immediate liquidation. Immediate. On the same 00:27:06.549 --> 00:27:09.650 day they filed, March 17th, liquidation sales 00:27:09.650 --> 00:27:12.490 began at all U .S. stores. Everything must go. 00:27:12.809 --> 00:27:16.390 Fixtures, mannequins, hangers. By May 1st, 2025, 00:27:16.809 --> 00:27:19.029 all U .S. locations were permanently closed. 00:27:19.250 --> 00:27:22.269 Just like that. From 400 plus stores in the U 00:27:22.269 --> 00:27:25.349 .S. to zero in less than two months. That is 00:27:25.349 --> 00:27:27.849 whiplash. It is a breathtaking collapse. And 00:27:27.849 --> 00:27:29.710 here is the Black Mirror part of the episode. 00:27:29.829 --> 00:27:33.079 The name didn't die. Section 7. The digital afterlife. 00:27:33.460 --> 00:27:35.519 The brand has become what we call a zombie brand. 00:27:35.819 --> 00:27:38.460 The intellectual property, the name Forever 21, 00:27:38.819 --> 00:27:41.380 is still owned by Authentic Brands Group. ABG, 00:27:41.400 --> 00:27:43.500 the third partner in the rescue. Right. And ABG's 00:27:43.500 --> 00:27:45.119 business model is fascinating. They don't make 00:27:45.119 --> 00:27:47.660 clothes. They own names. They own Elvis Presley, 00:27:47.740 --> 00:27:50.740 Marilyn Monroe, Reebok, and now Forever 21. So 00:27:50.740 --> 00:27:52.480 they just license the name out to whoever wants 00:27:52.480 --> 00:27:56.000 to pay for it. Exactly. In September 2025, it 00:27:56.000 --> 00:27:58.279 was announced that Forever 21 would relaunch 00:27:58.279 --> 00:28:01.440 as an online -only retailer. But who was running 00:28:01.440 --> 00:28:03.569 it? It's not the Chang family. It's not Spark. 00:28:04.009 --> 00:28:07.130 It's a company called Unique Brands. Unique Brands. 00:28:07.130 --> 00:28:09.089 That sounds like a shell company in a spy movie. 00:28:09.349 --> 00:28:11.049 They also own the digital ghost of the department 00:28:11.049 --> 00:28:14.430 store, Bonton. The operations are sliced and 00:28:14.430 --> 00:28:17.140 diced. A company called Mark Edwards Apparel 00:28:17.140 --> 00:28:19.759 runs the women's wholesales. Another company 00:28:19.759 --> 00:28:22.440 called Kids Concepts oversees children's wear. 00:28:22.619 --> 00:28:24.960 So it's a Frankenstein monster, different parts 00:28:24.960 --> 00:28:27.180 run by different companies, all wearing the skin 00:28:27.180 --> 00:28:30.859 of Forever 21. That is a vivid but accurate description. 00:28:30.980 --> 00:28:34.119 If you go to the website in late 2025, you are 00:28:34.119 --> 00:28:36.579 buying a shirt made by Mark Edwards Apparel with 00:28:36.579 --> 00:28:39.559 a Forever 21 tag slapped on it, paying a licensing 00:28:39.559 --> 00:28:43.599 fee to ABG. The culture, the stores, the infrastructure 00:28:43.599 --> 00:28:45.910 that the Changs built, That is all gone. It's 00:28:45.910 --> 00:28:48.670 just a logo. It is now purely a marketing vehicle. 00:28:48.910 --> 00:28:51.490 It's tragic in a way. I mean, thinking back to 00:28:51.490 --> 00:28:53.309 that 900 square foot store in Highland Park, 00:28:53.450 --> 00:28:56.369 the hustle of Du Wenchang pumping gas to save 00:28:56.369 --> 00:28:58.990 up that $11 ,000, the sheer scale of what they 00:28:58.990 --> 00:29:02.589 built. And now it's just a URL owned by a holding 00:29:02.589 --> 00:29:05.390 company. It is the life cycle of modern retail. 00:29:06.130 --> 00:29:09.029 Accelerated. Forever 21 revolutionized retail 00:29:09.029 --> 00:29:12.230 by democratizing fashion. They made trends accessible 00:29:12.230 --> 00:29:15.279 to Everyone, not just the wealthy. They told 00:29:15.279 --> 00:29:17.160 a generation of girls, you can look like Paris 00:29:17.160 --> 00:29:20.359 Hilton for $20. Right. But they failed to adapt 00:29:20.359 --> 00:29:22.420 to the digital shift and they failed to reckon 00:29:22.420 --> 00:29:24.859 with the ethical and sustainability demands of 00:29:24.859 --> 00:29:28.180 modern consumers. And ultimately, they were eaten 00:29:28.180 --> 00:29:31.200 by the very culture of speed they helped create. 00:29:31.400 --> 00:29:33.559 That's the irony, isn't it? They were the fast 00:29:33.559 --> 00:29:36.819 ones until someone faster came along. Exactly. 00:29:37.240 --> 00:29:40.740 So if we look at the big picture here. What is 00:29:40.740 --> 00:29:43.019 the takeaway for you? Because for me, it feels 00:29:43.019 --> 00:29:45.460 like a warning sign. I think the provocative 00:29:45.460 --> 00:29:48.160 question now is about the cycle itself. If Forever 00:29:48.160 --> 00:29:51.460 21 was destroyed by Shane and Timu because they 00:29:51.460 --> 00:29:54.660 were faster and cheaper and more digital, who 00:29:54.660 --> 00:29:57.190 destroys Shane and Timu? That's a scary thought. 00:29:57.369 --> 00:29:59.910 Is there something faster than ultra fast? Are 00:29:59.910 --> 00:30:01.930 we going to have clothes 3D printed in our living 00:30:01.930 --> 00:30:04.509 rooms? Or does the cycle accelerate to a point 00:30:04.509 --> 00:30:07.109 where no retailer can survive long term? Are 00:30:07.109 --> 00:30:09.109 we moving toward a model of disposable brands 00:30:09.109 --> 00:30:11.750 just like we have disposable clothing? Brands 00:30:11.750 --> 00:30:14.690 that pop up on TikTok, dominate for 18 months, 00:30:14.849 --> 00:30:17.230 and then vanish into the ether. That is something 00:30:17.230 --> 00:30:18.589 to think about the next time you're scrolling 00:30:18.589 --> 00:30:22.109 through an app and see a $3 shirt. Indeed. Look 00:30:22.109 --> 00:30:25.049 at the tag. There is a history there. And usually. 00:30:25.559 --> 00:30:28.019 A clock ticking. Well, on that cheerful note, 00:30:28.140 --> 00:30:30.099 thank you for listening to this deep dive into 00:30:30.099 --> 00:30:33.700 the rise and fall of Forever 21. It's been a 00:30:33.700 --> 00:30:36.420 journey from the yellow bag to the liquidation 00:30:36.420 --> 00:30:39.000 sale. It certainly has. Check your closets, folks. 00:30:39.220 --> 00:30:41.279 You might have a collector's item in there. We'll 00:30:41.279 --> 00:30:42.440 see you on the next deep dive.