The Forever 21 Bankruptcy Story: From $11,000 to Billions to Bust
It's 1981, and a young Korean couple arrives in Los Angeles with barely a word of English between them.
It’s 1981, and a young Korean couple arrives in Los Angeles with barely a word of English between them. Do Won Chang is pumping petrol at a service station, watching wealthy customers roll up in their flash cars. Being naturally curious, he starts asking them what they do for a living. The answer keeps coming back the same: fashion.
Fast forward to 2015, and that same petrol pump attendant is worth nearly $6 billion, running a global fashion empire with over 800 shops. Then, just as dramatically, it all comes crashing down. The Forever 21 bankruptcy story is equal parts inspiring and cautionary – a tale of Korean immigrants who built a fashion empire from nothing, only to watch it crumble twice.
This is a story with a peculiar twist involving Bible verses on shopping bags, and lessons every entrepreneur needs to hear.
Three Jobs, One Dream
Do Won Chang’s American dream began with a nightmare schedule. After arriving from Seoul with his wife Jin Sook in 1981, he juggled three jobs just to keep their heads above water. Mornings at a coffee shop, afternoons at the petrol station, evenings at a clothing store. Jin Sook worked as a hairdresser. They saved every penny they could.
The couple had grown up poor in South Korea. Do Won had run a small coffee delivery business in Seoul’s Myeong-Dong district before deciding to try their luck in America. Like many immigrants, they believed the streets would be paved with gold. Instead, they found themselves working 19-hour days for minimum wage.
But Do Won was observant. At that petrol station, he noticed a pattern: the customers with the nicest cars all seemed to work in the garment business. Los Angeles’s Fashion District was booming, and Korean immigrants were carving out a significant niche. By some estimates, they controlled up to half of the district’s wholesale clothing business.
The $11,000 Gamble
By 1984, the Changs had scraped together $11,000. They poured every cent into a 900-square-foot shop in LA’s Highland Park neighbourhood, calling it Fashion 21. Their target market? The local Korean-American community.
The shop was tiny, cramped, and stocked with trendy clothes at rock-bottom prices. But something clicked. Young women – not just Korean-Americans but teenagers from all backgrounds – started making the trek to Highland Park. First-year sales hit $700,000, an astronomical figure for such a small shop.
The Changs had stumbled onto something powerful: the hunger for fast fashion before anyone had coined the term. They could spot trends on the streets of LA, source similar styles from wholesale markets, and have them on the racks within weeks.
The Secret on the Shopping Bag
Here’s where the story takes an unexpected turn. If you’ve ever shopped at Forever 21, you might have noticed something odd printed on the bottom of their iconic yellow bags: “John 3:16”.
The Changs are devout Christians who wake up for 5 a.m. prayers and go on missionary trips instead of holidays. When CNN asked Do Won about the Bible verse in 2012, he explained through a translator: “I hoped others would learn of God’s love. So that’s why I put it there.”
It was a peculiar choice for a fashion brand that sold crop tops and mini skirts, but the Changs saw no contradiction. Their faith was their foundation, even as they built an empire on fast fashion’s decidedly worldly appeal.
Exponential Growth
The Changs renamed their shop Forever 21 in 1987, aiming to capture that sense of eternal youth. The name was genius – who doesn’t want to be forever 21?
Their expansion was breathtaking:
- By 1989: 11 stores across California
- By 2001: First international store in Canada
- By 2006: Launch of 21 Men
- By 2015: Over 800 stores worldwide, pulling in $4.4 billion annually
They were opening a new store every six days at their peak. The Changs had gone from counting pennies to counting billions. Forbes estimated their combined net worth at $5.9 billion.
The Forever 21 Bankruptcy Story: What Went Wrong?
But cracks were forming in the facade. Forever 21’s stores were massive – some over 100,000 square feet, taking over spaces abandoned by dying retailers like Borders and Mervyn’s. As Linda Chang, the founders’ daughter, later admitted: “We went from seven countries to 47 countries within a less-than-six-year time frame and with that came a lot of complexity.”
The company was also surprisingly behind on e-commerce. By 2018, online sales made up just 16% of their revenue. Meanwhile, nimble online competitors like ASOS and Boohoo were eating their lunch.
Most damaging of all, Forever 21 was losing its core customers. The very teenagers and twenty-somethings who’d made the brand were growing up and moving on. Younger shoppers found the stores chaotic and the quality questionable. The brand that had disrupted fashion was itself being disrupted.
The First Collapse
In September 2019, the first chapter of the Forever 21 bankruptcy story began. They closed 178 US stores and retreated from 40 countries. The fashion empire was crumbling.
A consortium including mall operators Simon Property Group and Brookfield Property Partners bought the company for just $81 million – roughly 2% of its peak revenue. The Changs’ fairy tale seemed to be over.
The Final Curtain
The new owners tried to revive the brand, even partnering with Chinese fast-fashion giant Shein in 2023. But it was too little, too late. Online retailers like Shein and Temu were shipping clothes directly from China, undercutting Forever 21’s already low prices.
On 17 March 2025, the final chapter of Forever 21’s bankruptcy story was written. This time, there would be no rescue. All US stores would close permanently. The company that promised to keep customers forever 21 couldn’t even make it to 41.
Lessons from the Forever 21 Bankruptcy Tale
The collapse offers several crucial lessons for modern entrepreneurs:
1. Adapt or die: The Changs built their empire on physical retail just as e-commerce was taking off. By the time they tried to pivot online, it was too late.
2. Bigger isn’t always better: Those massive stores that seemed like assets in 2010 became millstones around the company’s neck as shopping moved online.
3. Know your customer: Forever 21 lost touch with what young shoppers wanted – sustainability, quality, and authentic brands. They were still partying like it was 2005.
4. Debt is dangerous: Rapid expansion meant massive debts. When sales slowed, those lease obligations didn’t go away.
The Bittersweet Legacy
Despite the bankruptcies, the Changs remain wealthy, with an estimated net worth of $1.6 billion. They transformed themselves from penniless immigrants to billionaires, even if they couldn’t sustain it.
Their story embodies both the promise and peril of the American dream. Yes, a couple with no money, no English, and no connections could build a global empire. But that empire proved as fragile as the fast fashion it sold.
As I write this, Forever 21 stores across America are holding closing-down sales. Those yellow bags with John 3:16 printed on the bottom – reminders of the founders’ faith and ambition – will soon be collectors’ items.
The verse speaks of everlasting life. The company, it turns out, was rather more mortal. The Forever 21 bankruptcy story serves as a powerful reminder that in business, nothing lasts forever – not even when it’s right there in the name.
