Fast fashion retailer Forever 21’s business has been slow going it seems.
EZ Worldwide Express, a shipping firm that had promised to be Forever 21’s exclusive carrier for nearly 200 stores until 2019, canceled the contract with the clothier, dropping the company altogether because its business was too slow to be profitable, The Wall Street Journal reported.
The Elizabeth, New Jersey-based company has been downsizing since filing for bankruptcy protection in January, which was brought on by retail’s bad patch. Slow business in last year’s fourth quarter took the retailer by surprise in a period it typically rakes in 40 percent of its annual revenue.
“Although the retail industry in general had a satisfactory season, the balance between in-store retail sales and online sales tipped dramatically towards online sales and direct-consumer delivery,” EZ Worldwide Express president Ajay Aggarwal said in court papers at the time. “Since our businesses serve primarily in-store retailer sales, we suffered accordingly.”
Since the bankruptcy filing, EZ Worldwide Express has laid off roughly 200 of its previously 700-strong workforce, according to the Journal, and the company will sell around 140 vehicles and other equipment like tractors, forklifts and conveyor belts that it won’t need without Forever 21’s business.
Close to half of the company’s revenue had been coming from Forever 21, but the retailer—a private, family-owned business that doesn’t disclose its financials—has reportedly seen its business decline “precipitously.”
“[Weekly] sales to Forever 21 have ranged from a low of $352,483 to a high of $428,764,” lawyers for EZ Worldwide Express said in court documents filed in May, according to the Journal. “These numbers are drastically lower than the same five week period last year, where weekly sales ranged from $629,817 to $780,730.”
Things don’t seem to be faring well for Forever 21 in the U.K. either.
Last week, The Telegraph reported that Forever 21 could cut back on the size of its remaining four stores in the UK. Things were never stellar for the retailer since its U.K. entry in 2010, and stores have been steadily downsized in recent years. Now the company, with the aid of a property agency, is reportedly reviewing its remaining U.K. stores with the intent to scale back on those too.
Currently, Forever 21 operates more than 730 stores in 48 countries, and according to its website, has plans to become an $8 billion company (Forbes valued it at $4.4 billion last year) by 2017 and open 600 stores in the next three years.