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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, Richard writes.

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 Richard 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 today'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 on that business, perhaps by taking it public.

Tang says that he, Salter, and Simon Property Group CEO David Simon speak frequently about 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.

1. Here comes Forever 21 X Shein

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

Oct. 23 — August, a New York City-based period care brand, is raising a bridge round from existing investors, co-founder Nadya Okamoto told Richard exclusively.

Why it matters: After decades of stagnation due to stigmatism, feminine care has seen a burst of innovation in recent years due to a new generation of startups.

Go deeper: Read Monday's Retail newsletter, plus Monday's Pro Rata on the risks behind the AI investment boom.

2. Period care startup August raising bridge round

Illustration of a woman flexing her bicep featuring a dollar sign tattoo

Oct. 24 — Fit:Match.ai struck a partnership with The Marena Group to use its technology to help patients with their medical compression garments post-surgery, CEO Haniff Brown told Kimberly.

Why it matters: The compression wear and shapewear market is estimated to reach $6.95 billion globally by 2030, according to Allied Market Research.

Go deeper: Read Tuesday's Retail newsletter, plus Tuesday's Pro Rata on a Russian metals company's ties to China.

3. Tech to reshape the medical shapewear industry

Oct. 25 — Zero Acre Farms, which aims to replace seed-based cooking oils with an alternative fermented from sugar cane, is eyeing a Series B in the second half of 2024, CEO Jeff Nobbs told Richard exclusively.

Why it matters: Seed-based cooking oils have a high carbon footprint — both palm oil and soybean oil production are leading contributors to deforestation.

Go deeper: Read Wednesday's Retail newsletter, plus Wednesday's Pro Rata on venture capital growing more comfortable funding military technologies.

4. Zero Acre Farms prepping Series B

Zero Acre Farms oil bottle sits on a table next to three potatoes

Oct. 26 — Mars Petcare believes it can support a wave of innovation to help pet parents through its latest venture fund, Kimberly wrote.

Why it matters: With a growing pet population — and a class of pet parents wanting to provide premium care for their furry loved ones — investment in the area has popped.

Go deeper: Read Thursday's Retail newsletter, plus Thursday's Pro Rata on the SF-based on-premise cloud computer developer Oxide Computer Co.'s $44m Series A raise.

5. Mars Petcare wants to expand pet care innovation

Illustration of a dog wearing a cone made out of money.

It's Friday, Retail readers. Research associate Natalie Breymeyer here, with your weekly digest.

But first, Richard has news on a big retail partnership.

🎃 Natalie is excited to attend some Halloween parties this weekend.

❤️‍🔥 Thanks for reading and special thanks to copy editor Mickey Meece! Please ask your friends and colleagues to sign up.

October 27, 2023

1. Here comes Forever 21 X Shein