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One family built Forever 21, and fueled its collapse

FILE - In this Dec. 26, 2010 file photo, people walk past a Forever 21 store in New York's Times Square. The population of the U.S. has grown by 8 million people since the previous record was set. That means there were millions more shoppers in stores this Christmas, driving up the sales total. But the average amount of spending per person was down from a few years ago, suggesting consumers are still slower to pull out their wallets. (AP Photo/Mary Altaffer, file)
FILE - In this Dec. 26, 2010 file photo, people walk past a Forever 21 store in New York's Times Square. The population of the U.S. has grown by 8 million people since the previous record was set. That means there were millions more shoppers in stores this Christmas, driving up the sales total. But the average amount of spending per person was down from a few years ago, suggesting consumers are still slower to pull out their wallets. (AP Photo/Mary Altaffer, file) FILE - In this Dec. 26, 2010 file photo, people walk past a Forever 21 store in New York's Times Square. The population of the U.S. has grown by 8 million people since the previous record was set. That means there were millions more shoppers in stores this Christmas, driving up the sales total. But the average amount of spending per person was down from a few years ago, suggesting consumers are still slower to pull out their wallets. (AP Photo/Mary Altaffer, file)

By Sapna Maheshwari / New York Times News Service 10 min read

When Forever 21 filed for bankruptcy last month, the fast fashion chain described its history in documents that read, at times, like a pitch for a memoir or a Netflix special.

Photos of the company’s husband and wife founders, Do Won and Jin Sook Chang, and their two daughters appeared under headings like “Forever Striving: A Story of Grit, Determination, and Passion.” The filing emphasized the improbable success of the Changs, who immigrated to the United States from South Korea in 1981 and built a multibillion-dollar business from scratch.

There were references to the daughters’ undergraduate degrees from “Ivy League universities” – both are top executives at the company – and summer breaks spent at Forever 21 stores. A definition of the American dream, as explained by Investopedia.com, even appeared on one page.

The Changs were indeed a unique success story, and Forever 21 was far from a run-of-the-mill family operation. At its peak, the retailer brought in more than $4 billion in annual sales and employed more than 43,000 people worldwide in hundreds of stores. Now it is leaving 40 countries and closing up to 199, or more than 30%, of its stores in the United States as part of its bankruptcy, and former employees and industry experts are pointing to the Changs’ insular management style as a significant reason for the collapse. They cite disastrous real estate deals and the chain’s bungled merchandising strategy in recent years.

“On the founder side, this hubris thing is pretty common, but it’s particularly deadly if you’ve been successful for a long time,” said Erik Gordon, a management expert at the University of Michigan Ross School of Business. “They didn’t have a board of directors to give them a reality check, they didn’t have equity analysts to give them a reality check.”