Forever 21 Closing Huge Store in Central California

Forever 21 said it will be closing its 120,000-square-foot store in San Luis Obispo, Calif., in January and laying off scores of employees.

In a Nov. 12 letter sent to San Luis Obispo Mayor Jan Marx, Forever 21 said it will cease all store operations at the San Luis Obispo Promenade on or around Jan. 6.

The store employs 72 people, who will be given an opportunity to work at other Forever 21 stores or be laid off, said the letter, sent by Forever 21 Human Resources Manager Shavaun Burse. Inquiries to Forever 21 for comment were unanswered.

The employees affected include one store manager, two assistant store managers and 63 store associates.

The Forever 21 outpost at the San Luis Obispo Promenade makes up almost half of the shopping center, which was bought in 2014 by The Kroenke Group, based in Columbia, Mo.

In 2009, Forever 21 took over more than a dozen leases and bought three former Gottschalks department-store buildings after Gottschalks declared bankruptcy. Forever 21 bought the former Gottschalks department store in San Luis Obispo for $8.5 million.

At the time of Forever 21’s move into the former Gottschalks spaces, several shopping-center owners filed lawsuits objecting to Forever 21’s moves.

The owners of the Country Club Plaza Shopping Center in Sacramento worried that Forever 21 didn’t have the weight needed to occupy the anchor position held by Gottschalks.

“Landlord does not dispute that Forever 21 is a complementary tenant for the shopping center, in that its retail merchandise suitably targets the desired customer,” the shopping center’s lawsuit said. “However, Forever 21 is not currently a national or regional anchor occupying 194,000 square feet in any shopping center in California.” The landlord feared giving Forever 21 the lease would create a ripple effect that would result in financial disaster, the objection said. Macy’s is now the anchor tenant at the Country Club Plaza Shopping Center.

In San Luis Obispo, it is unclear what will happen to the space being vacated by Forever 21. Proprety manager Trey Landes of The Kroenke Group deferred all questions to Forever 21.

San Luis Obispo Mayor Marx noted that the city is a commercial hub for the region and the residents would like to see another department store, such as a Macy’s, occupy the Forever 21 space. “That Forever 21 store was always empty,” she said. “I don’t know what that space is going to be used for.”

She said The Kroenke Group bought the Gottschalks department store when it purchased the promenade in 2014 and leased the space back to Forever 21.

Forever 21 was founded in 1984 by Don Chang as a retail chain that occupied smaller spaces in shopping centers. The company’s first store, in the Highland Park area of Los Angeles, was only 900 square feet.

But in mid-2006, Forever 21 launched its first department store–style outpost by converting an old Saks Fifth Avenue in Pasadena, Calif., into a 40,000-square-foot emporium.

Now the average Forever 21 store encompasses 38,000 square feet, with the largest space covering 162,000 square feet.