Forever 21, struggling with global expansion, explores a debt restructuring

A woman watches as shoppers select clothing at a Forever 21 store in Beijing. The company is pulling out of the China market.
(Andy Wong / Associated Press)

Fast-fashion chain Forever 21 Inc. is in talks with potential lenders and restructuring advisors as it explores options for turning around its ailing business, according to people familiar with the matter.

The Los Angeles company is exploring financing that would shore up its liquidity and ensure founder Do Won Chang maintains control, said the people, who asked not to be identified because they’re not authorized to speak publicly. The chain has also spoken with Apollo Global Management about lining up potential debtor-in-possession financing if it were to seek bankruptcy protection, the people said.

“Forever 21 is speaking with our lenders in the normal course of business and are in compliance with all of our agreements and continue to operate as usual,” the company said via email. A spokesman for Apollo declined to comment.


The chain has opened large-format stores and expanded into new markets at a time when competitors have pulled back. Forever 21 operates hundreds of stores in the U.S., Europe, Asia and Latin America, and its international operations in particular have been a drag on business, one person said.

Forever 21 confirmed to WWD in April that it is pulling out of the China market.

The family-owned company opened its first store in Los Angeles in 1984 as Fashion 21 and established itself as a destination for younger shoppers looking for trendy clothes at affordable prices. But competitors have crowded into that segment of retail, from H&M to Target to new online sellers.

Another retail upheaval could cause more pain for landlords already dealing with thousands of store closings this year in the wake of liquidations of chains such as Payless Inc. and Shopko and other pruning as even healthy retailers adapt to shifting consumer habits.