The following article is the text that I use for the Great Business Stories podcast on this topic. To listen to the podcast, click on this link or alternatively listen to Great Business Stories on Spotify or Apple Podcasts.
I love this story because it’s the story of the American dream. It begins in a tiny Los Angeles storefront started up by a Korean immigrant couple and within a decade, they’ve created an empire. But there’s sweatshop scandals, religion, and a relentless refusal to slow down, leading to 2 bankruptcies, this is the story of how Forever 21 went from defining a generation… to becoming a case study in retail self-destruction.
From Janitor to Fashion Retailer
Do Won Chang and his wife Jin Sook were Korean emigrants, with barely any English and in the early 80’s Do Won worked 3 jobs as a janitor, gas station attendant, and coffee shop server while his wife Jin Sook worked as a hairdresser. Do Won said noticed something in those early years: the men driving luxury cars often worked in the garment trade. That insight became his inspiration for getting into the clothes business. Jin Sook his wife tells a slightly different story -she is quoted as recalling that soon after arriving in America, she went to the top of a mountain to pray – and God told her she should open a store- the Changs were devout born again Christians.
Either way, they saved $11,000 and in April 1984, they opened a 900-square-foot clothing shop in Highland Park, Los Angeles called Fashion 21.
By the end of the first year, Fashion 21 had grossed $700,000 in sales—an astonishing figure for a first-time business in the cut-throat retail sector- they had a simple, direct vision: provide “fast and affordable street fashion” for working-class youth who couldn’t afford luxury brands.
It wasn’t long before the Changs rebranded to Forever 21 with Do Won as the CEO; Jin Sook, in charge of merchandising.
Inventory at Warp Speed
At first, they bought discounted wholesale stock from Los Angeles’s garment district. But before long, they transitioned to contracting local manufacturers to produce their own designs based on emerging trends. About 60% of their production remained in the U.S., giving them the advantage of proximity and speed.
Their model was built on volume and velocity. Forever 21 would identify a popular style, recreate it cheaply (and recreate might be a nice way of putting it- as we shall see later they got into big legal spats over copyright infringement), and have it in stores within weeks. Customers came back often, knowing shelves were constantly replenished. That fast-turn inventory system became the backbone of Forever 21’s success.
Malls, Malls, and More Malls
Flush with profits from their first store, the Changs launched an aggressive expansion strategy in the late 1980s. By 1989, they had eleven stores, including their first in a traditional shopping mall. Many of their early stores clocked in at around 5,000 square feet.
The formula was simple: set up shop in high-traffic malls, often taking over units vacated by floundering retailers, and invest early profits into new locations. The Changs opened roughly one store every six months in the first decade. By 2000, Forever 21 operated nearly 100 stores nationwide, some as large as 10,000 square feet, and was a staple of American malls.
Sweatshops in the Supply Chain
While Forever 21’s rapid growth was hard to miss, so too were the questions it raised about labor practices. During the 1990s, the company relied heavily on Los Angeles’s garment industry, a sector known for sweatshop labor. The decision to keep manufacturing close to headquarters allowed the Changs to cut production time—but it also exposed the company to murky subcontracting labor pratcices.
By the late ’90s, workers producing clothes for Forever 21 came forward with stories of 12-hour days, unsafe conditions, and pay below the minimum wage.
The issue erupted into full-blown controversy in 2001, nineteen garment workers sued Forever 21 over alleged sweatshop conditions in LA factories.
The battle escalated. A national boycott followed. Protesters picketed stores. The dispute dragged on until 2004, when a confidential settlement ended the boycott. Forever 21 pledged to ensure “clothes it sells are made under lawful conditions.” No admission of guilt.
Faith in Every Bag
Ironically, given their apparent disregard for labour conditions, Forever 21 was guided by the founders’ unwavering Christian faith. The couple attend an early morning church prayer service at 5:00 a.m. every day and they saw the company’s success as divinely guided to the extent that they had John 3:16 from the bible printed on the bottom of all of their yellow shopping bags.
However, the Changs did not overtly market Forever 21 as a Christian brand. As their daughter Linda Chang later clarified, “The faith of the founders is separate to the brand – the bag is simply a statement of faith.”
Now I’m not a believer, but I get it- and if they wanted to put a few lines from the bible on the bottom of their bags, let em at it. And it also has to be pointed out that the Changs, though their Chang 21 Foundation gave very very generously to charities in third world countries - and it wasn’t just doling out money- instead of going on luxurious vacations, they visited many of the charities in far off and often dangerous locations.
Even when they became billionaires, Do Won would still sometimes take the bus to work
In personal demeanor, Do Won is typically described as gentle, upbeat, and earnest, with a ready smile. He isn’t a jokester, but he appreciates humor. Jin Sook is more reserved and can come across as stern. Kindness in small ways seems to be part of their character – like remembering birthdays, or paying for an employee’s mother’s funeral quietly.
By all accounts from people who knew them and worked closely with them, the changs come across as humble and overall pretty good people.
So I’m not sure how their faith fits in with their disregard for how people in a garment factories were treated, and also to a lesser extent to the copyright infringements that we’ll get onto later on- Perhaps the Changs reconciled it internally by viewing their personal actions (charity, missions, church) as their service to God, while regarding business as a competitive domain governed by its own harsh rules - it’s hard to know.
One very notable aspect of the changs is what Friends and employees describe as an almost superhuman work ethic both Do Won and Jin Soook would be first to arrive at the office and last to leave.
– a living embodiment of the Korean concept of “ppalli-ppalli” (hurry-hurry), which denotes speed, efficiency and tireless drive- this helped them to grow at breakneck speed, but it’s also what would lead the company into trouble as it grew too big.
Taking Over the Department Store’s Turf
By 2001, Forever 21 had outgrown its teen-mall boutique image. They started opening up larger sprawling, stores in big cities: LA, Chicago, Miami, Toronto. Inside, boutique-style departments for men’s, women’s, plus-size, and cosmetics sprawled under one roof, like a department store.
And opportunity was abundant- retailers like Gadzooks, Rampage and Mervyns went under and Forever 21 swooped in buying the store leases, each space averaging 80,000 square feet.
Nowhere was the strategy more audacious than Times Square. In June 2010, the brand opened a 91,000-square-foot megastore in the old Virgin Megastore building. Four floors, LED screens- “An experience, not just a store,” as one executive put it.
Scaling Without Outside Money
Annual sales, around $640 million in 2005, surged to $1.3 billion by 2007. Even during the 2008 financial crisis, the business model—frequent turnover, low cost, minimal advertising—held firm. As recession hit, frugality became fashionable. Cheap was in and by the end of the decade 2010, the brand had effectively defined American fast fashion. For teens and twenty-somethings, it became the default.
It was generating close to $2 billion in annual revenue. Store count passed 500. Its footprint stretched across America and into Dubai, Canada, and the UK. And all of it remained under family control. CFO Larry Meyer said they would IPO “when the timing is right.” It never seemed to be. The Changs preferred to keep control.
A Family Business with Founder Speed
Don Won and Jin Sook were still calling every major shot. The founders’ daughters were increasingly visible. Linda Chang, mid-20s, took over marketing in 2008. Esther Chang handled visual merchandising.
Internal governance was informal. Decisions were made quickly, there was no board in the conventional sense. “We never know where we’re going to be,” Meyer once said, describing a week under the Changs’ direction.
It all sounds a bit chaotic and unstructured- which it was and in stark contrast to their main competitors- the likes of H&M and Zara who were opening stores in select metros with far more planning in place. With Forever 21 it was in every mall, every suburb, every mid-tier city. This gave it reach- but this scatter gun, frenzied approach would come back to bite them.
Bigger Stores, Slower Sales
The Changs, with confidence in their strategy and I’m guessing their own abilities set an ambitious target-600 new stores and $8 billion in revenue by 2017. They ended up exceeding that target in terms of stores, but not revenue-wise. By 2018, Forever 21 had ballooned to more than 800 stores in 57 countries, and employed 43,000 people. But rather than fueling growth, the added square footage exposed deep weaknesses and stores started losing money.
Why? They simply hadn’t put the structures and processes in place to accommodate this huge growth: stockrooms overflowed, staff used dressing rooms for storage, and merchandise sat unsold as shipments kept arriving. The speed that had once powered Forever 21’s turnover was now clogging its own system.
Private Control, Public Fallout
They simply didn’t have the expertise within their very small circle to manage this growth -they remained too insular. And executives hired from the outside often found their ideas sidelined. One observer summed it up plainly: “The family ignored all their recommendations.” When the business began showing signs of strain, the instinct was to circle the wagons, not to rethink strategy.
Brand Imitator or Design Thief?
Then there were the lawsuits that had dogged the company for years. The brand had long walked the line between trend replication and outright copying. But from 2011 to 2018, that line all but disappeared. Fashion designers large and small accused Forever 21 of lifting their work wholesale. Diane von Furstenberg, Gwen Stefani, Adidas, H&M and many many more sued, oftentimes repeatedly. The lawsuits didn’t slow production—but they painted a picture of a company profiting on blurred lines and legal settlements, rather than original design.
Workers, Wages, and Reputation
And despite their earlier run in over labour issues, it appears that they didn’t learn their lesson. Labor disputes piled up throughout the decade.
And while it could be argued that technicallyForever 21 didn’t directly employ the people in these garment factories, Jin Sook personally visited factories where their clothes were being made, and when you're signing the checks, even indirectly, you can't turn a blind eye to what’s happening on the factory floor. It was wrong and it's definitely a black mark against them.
Missing the E-Commerce Train
As well as the unstructured, frenzied approach to growth, probably their most glaring business misstep was digital. While the rest of the fashion industry—especially its competitors—poured money into e-commerce and mobile strategy, Forever 21 focused on growing their physical footprint. By 2018, only 16% of its sales came from online. The company had no substantial influencer partnerships, no major social media traction, and no omnichannel integration to speak of.
Digital-first competitors like Boohoo began eating into Forever 21’s market.
Customers Drift Away
On the ground, the operational issues were noticed by customers. Stores grew cluttered. The once-exciting product rotation became repetitive and stale. Shoppers who had once treated Forever 21 as a treasure hunt now found it exhausting. Complaints mounted about quality, fit, and a sense that Forever 21 was increasingly off-trend. Teens looked elsewhere.
The result was a quiet but unmistakable slide into irrelevance- the dreaded word in fashion- once you're seen by your most loyal customers as no longer being relevant- well, it’s almost impossible to come back from that . And so it was for Forever 21-Sales after peaking at $4.4 billion in 2015, declined to $3.3 billion by 2018. Many of the overseas flagship stores were hemorrhaging cash- its stores in Canada, Europe and Asia were losing an average of $10 million per month.
Bankruptcy, Store Closures, and a Race Against the Clock
In September 2019, Forever 21 filed for Chapter 11 bankruptcy, the company owed $347 million to its vendors.
It secured $275 million in debt financing and an additional $75 million from new backers to stay afloat during proceedings. Time was tight: the company had just 120 days to make decisions on hundreds of leases.
The company’s store footprint was cut aggressively. It exited Canada entirely, closing 44 stores, and pulled out of Europe and most of Asia. The first round of closures totaled around 200 stores globally.
Negotiations with landlords were tense. Four property owners held nearly half the company’s leases and the biggest landlord tried to negotiate an equity stake in exchange for rent relief. Talks fell apart. Behind the scenes, the Chang family—still in control—had refused to dilute their ownership.
A Buyout and New Ownership
In February 2020, the court approved the sale of Forever 21 to a consortium led by Authentic Brands Group (ABG) and that also included some of their biggest landlords. Their $81 million bid—less than a week’s worth of peak sales in Forever 21’s heyday—was the only offer on the table.
Effectively, the Changs who owned all of Forever 21 saw their net worth drop from its 2015 peak of $5.9 billion to now just $81million- and based my research, given that they never got outside investment and used proceeds from Forever 21 to fund the expansion over the years, I didn’t come across anything that suggested the Changs took huge amounts of money out of the company over the years.
The new plan: rebrand and modernize. Streamline stores. Lean into digital. License international operations instead of running them directly. The new owners installed Daniel Kulle, a former H&M executive, as CEO. He talked about loyalty programs, experiential retail, pop-ups.
The Pandemic and a Stalled Recovery
COVID-19 hit just weeks after the sale closed. Any momentum was crushed under lockdowns. Forever 21, like much of retail, went into survival mode. It closed more stores.
In 2021, sales rebounded slightly—reportedly reaching $2 billion—but the business was fundamentally weaker. Online competitors had surged during the pandemic, while Forever 21 remained reliant on physical locations.
Betting on Shein—and Losing
Forever 21 struck a partnership in 2023 with Shein—the very company that had outpaced and outpriced it. Shein-branded pop-ups were even launched inside Forever 21 stores.
But Forever 21 sales from Shein’s app disappointed.
By 2024, Forever 21 was again hemorrhaging cash. In January 2025, the brand's U.S. operating arm was $1.58 billion in debt.
Second Bankruptcy, A Diminished Brand
On March 16, 2025, Forever 21 filed for Chapter 11 for the second time.
Forever 21 may still live on as a licensed brand—its name slapped on products in foreign franchises or sold online through partners. But the vision of Forever 21 as a mall giant, a teenage rite of passage, a cultural touchstone—that’s over- and has been for many years.
Now in a lot of the research on the collapse of Forever 21 experts pointed to their environmentally damaging, unsustainable fast fashion model, the lawsuits related to labour conditions and copyright infringement or outright theft, as other reasons as to why people turned away from the company- however this doesn’t hold much water when you look at the continued growth of retailers like Shein and Temu, both of whom have had and continue to have the exact same controversies.
Forever 21 collapsed as a result of its unstructured, breakneck growth, hampered by owners who were unwilling to cede any control or listen to sound advice.
What this story also shows is how people can so easily compartmentalize ethics- and I’m not just referring to the Changs here- I’m talking about a lot of us- as mentioned, the growth of Shein, Temu and lots of other online retailers demonstrates how lots of consumers either choose not to think about where their goods come from or just don;t care- or a bit of both-and I got to admit, that I fall into that category- but my socially aware teenage daughter is putting pressure on me and rightly so.
But forever 21 is also also the story of emigrant grit- the very thing that has made America this melting pot that allows ideas and businesses to flourish- and while there was no fairytale ending, it’s still a great business story – I hope you’ve enjoyed it as much as I have, and remember if you have any comments, any corrections or any story that you’d like us to cover, email us at: info@gbspod.com
All the best folks