The information in this blog post is based on information from this article from the Wall Street Journal.
Major ‘fast-fashion’ retailer, Forever 21, has begun to reconsider its financial position, as the retailer’s sales and profits have started to drop off. The company has considered different ways to finance their operations, including taking out a loan, and reducing their store size. The company is known for its extremely large storefronts, which come with a large price tag, which has not been paying off for the company. So far, they have had a tough time making use of these large spaces, so the company has decided to begin talks of scaling down their stores in certain locations. In addition, the company plans to take out a $150 million loan to finance the opening of new stores in South America, and support current stores that are struggling.
These business actions that Forever 21 is taking relate to the business concepts of change and strategy. The company is reacting to change in the apparel market, and a decrease in their sales, by taking action in order to preserve their company. Although the company is not in a dire situation, taking action, and moving with the flow of the market helps the company adapt and grow, which will allow it to be successful in the long term. These changes are also in the best interest of all of the stakeholders, as all the different parties are invested in the continued success of the firm. In terms of strategy, the actions that have been taken are all a part of the company’s strategy. At this point, their strategy is to maintain their success, as they have been extremely successful in recent years.
Overall, I think that the situation for Forever 21 is not extremely dangerous for the preservation of the company. Although there are clearly risks, such as not being able to pay back the large loan in time, or the failure of certain storefronts, I think that the company has taken the right action that will help them retain the success of their company. I think that the company has to be acutely aware of their financial situation, and quickly take action if they find that their sales and profits suddenly decrease. I also think that Forever 21 should reduce the amount of new storefronts that they open each year, and focus on making sure that all of their stores are operating smoothly, and creating profits for the company. After they have ensured that their current stores are in good shape, then they should start to create more stores. I think that doing this would allow the company to have a good foundation for expanding their operations.