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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.

Shein gains powerful new friends in the U.S.

Shein and Authentic Brands Group strike Forever 21 licensing deal

Authentic Brands and Shein struck a license partnership to launch the new brand.

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

Retail deals

Authentic Brands Group and Shein <a class="gtmContentClick" data-vars-link-text="struck a licensing deal" data-vars-click-url="https://www.prnewswire.com/news-releases/authentic-brands-group-and-shein-announce-strategic-agreement-for-forever-21-301969611.html" data-vars-content-id="38140d31-1454-4540-89e3-e049199a24c4" data-vars-headline="Shein and Authentic Brands Group strike Forever 21 licensing deal" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.prnewswire.com/news-releases/authentic-brands-group-and-shein-announce-strategic-agreement-for-forever-21-301969611.html" target="_blank">struck a licensing deal</a> 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.

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Shein and Authentic Brands Group strike Forever 21 licensing deal

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