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Shein and Authentic Brands Group strike Forever 21 licensing deal

Image of Shein pop-up store

Shoppers line up to shop on the opening day of a Shein pop-up store. Photo: Allen J. Schaben / Los Angeles Times via Getty Images

Authentic Brands Group and Shein struck a licensing deal that will have the online retailer produce a line of Forever 21 clothing.

Why it matters: The partnership opens short and long-term opportunities for the two firms that generate $30 billion and $40 billion in global retail sales, respectively.

Details: Authentic CEO Jamie Salter tells Axios this is the most important licensing deal his company has struck and will result in billions in additional sales.

  • The first step will see Shein develop a line of clothing and accessories labeled Forever 21 X Shein.
  • Salter and Shein's executive chairman, Donald Tang, say there's an opportunity for Shein to open shop-in-shops inside Forever 21 stores and pop-ups inside Simon-owned malls.
  • In a recent pop-up, Shein's presence more than doubled sales at a Forever 21 location, Salter says.

Flashback: In August, Shein acquired a third of Sparc Group, which runs the retail operations for Forever 21, Aéropostale, Brooks Brothers and Eddie Bauer.

  • Sparc, which also counts Simon Property Group and Authentic as investors, in turn acquired a minority stake in Shein.

The intrigue: Salter says Friday's partnership opens the door to several long-term possibilities, including Shein acquiring Authentic or the two partnering to acquire companies.

  • Near-term, Salter says the focus is on increasing Sparc's sales to $10 billion, from the current near $5 billion range.
  • Authentic and the co-owners of Sparc are also discussing whether it's time to further capitalize that business, perhaps by taking it public.
  • Tang says that he, Salter and Simon Property Group CEO David Simon speak frequently on how they can partner to improve the customer experience.

What's next: According to both Salter and Tang, the licensing deal is just the first of many projects the two companies are embarking on.

  • The partnership between Forever 21 and Shein will be expanded around the world and other brands in Authentic's portfolio could be added.
  • But the two partners want to focus on getting this initial stage right first before rushing to the next, Salter cautions.

Between the lines: Similar to its rivals Zara and H&M, Shein has recently come under fire for its labor practices and the impact of its business model on the environment.

  • That has caught the eyes of U.S. government officials and threatened to disrupt its plans for expansion and possibly an IPO.

Yes, but: By teaming with Authentic, which is backed by PE firm BlackRock, and the largest mall operator via its investment in Sparc, Shein gains powerful friends in the U.S.

  • Salter says after his many visits with Shein and his travels to China and Singapore, he has come to view the company and its employees as well-intentioned business people who are the future of retail.

Editor's note: This story has been corrected to state that the two companies generate $30 billion and $40 billion in global retail sales, not revenue.

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