Forever 21 to Layoff 700 Employees, Close LA Headquarters

Forever 21, is undergoing a significant restructuring that will result in the layoff of nearly 700 employees and the closure of its Los Angeles headquarters. This move comes as the latest in a series of setbacks for the company and its parent organization, Catalyst Brands.

The restructuring follows recent downsizing at Catalyst Brands, which let go of approximately 250 employees just last month. Catalyst, a joint venture between Sparc Group and J.C. Penney, oversees operations for several well-known retail brands, including J.C. Penney, Aéropostale, Brooks Brothers, Eddie Bauer, Nautica, Lucky Brand, and Forever 21. The intellectual property for these brands is wholly or partially owned by Authentic Brands Group.

The retail landscape has been challenging for Catalyst's shareholders, which include mall REITs Simon Property Group and Brookfield, Authentic Brands Group, and Shein. Simon Property Group, which established Sparc as a joint venture with Authentic five years ago, has since divested its stake in Authentic. Its retail investments, including J.C. Penney and Sparc (now Catalyst), have been experiencing consistent declines.

Earlier this year, as Catalyst launched, the company divested its Reebok operations and announced it was exploring strategic options for Forever 21. However, the options appear limited. The acquisition of Forever 21 out of bankruptcy for $81 million five years ago by Simon, Brookfield, and Authentic has not yielded the expected results. Authentic CEO Jamie Salter recently admitted that the acquisition was "probably the biggest mistake I made."

As Forever 21 continues to struggle, this latest round of layoffs and the closure of its headquarters signal a critical juncture for the brand. The company's future remains uncertain as it grapples with changing consumer preferences, increased competition in the fast-fashion sector, and the ongoing challenges facing brick-and-mortar retail in the digital age.