Dive Brief:
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Forever 21's operating company is laying off nearly 700 people in California and Pennsylvania, according to a series of WARN notices sent to the states in recent weeks.
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More than 350 work at the company's headquarters, which is closing, according to a letter sent to the California Employment Development Department. The others work at stores that will close permanently in coming weeks, according to the notices.
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In response to a query about the layoffs, a spokesperson for Forever 21’s operating company, which licenses the brand in the U.S., said by email that it “continues to explore strategic options while also looking at ways to reduce costs across our operations and optimize our store footprint.”
Dive Insight:
The closure of Forever 21’s operating headquarters follows on the heels of downsizing at Catalyst Brands, which confirmed last month that about 250 employees were let go.
Catalyst, a joint venture of Sparc Group and J.C. Penney, is now the operating parent for several retailers’ operations, including J.C. Penney, Aéropostale, Brooks Brothers, Eddie Bauer, Nautica, Lucky Brand and Forever 21. Authentic Brands Group owns or at least partially owns the intellectual property of all of those brands. Catalyst shareholders include mall REITs Simon Property Group and Brookfield, Authentic Brands Group and Shein.
Simon Property Group, which formed Sparc as a joint venture with Authentic five years ago, has divested its stake in Authentic. Its retail investments, including J.C. Penney and Sparc (now Catalyst), have posted consistent declines.
In January as Catalyst launched, the company sold off its Reebok operations and said it was exploring strategic options for Forever 21.
There don’t seem to be many options, however. Five years ago, Simon, Brookfield and Authentic acquired the fast-fashion retailer out of bankruptcy for $81 million. About a year ago, though, Authentic CEO Jamie Salter called the acquisition “probably the biggest mistake I made.”
Editor's note: This story has been updated to include details on the closure of Forever 21's operating headquarters in California.
