CEO Admits: Forever 21 Acquisition Was My Gravest Error
Goss on Shein and Forever 21's Uneasy Alliance
During a presentation at ICR, Jamie Salter, the bold CEO of Authentic Brands Group, spilled the beans about their unusual partnership with Shein. Salter purchased Forever 21 out of bankruptcy in 2020, but confessed it was a huge misstep. "I didn't have my eyes on Shein, nor Temu," he admitted. His board didn't approve the Forever 21 buy either. "My partner, Mr. Simon asked, 'Why partner with Shein? Isn't that a dumb move?' I said, 'David, it's a smart move. We can't beat them. Their supply chain is too powerful. They're winning the game. We need to team up with them.'"
While Forever 21's items are now available on Shein's platform, the sales aren't explosive, according to Salter. However, other aspects of the partnership are off to a flying start. He gushed about the pop-ups, which have been massive successes.
Rumors abound that Shein filed for a confidential IPO in November. This Chinese retail giant remains a secretive company, unwilling to publicly disclose financial figures. Nevertheless, Salter affirmed that Shein is one of the swiftest-growing fashion retailers globally, "if not the biggest fashion retailer in the world," and mentioned that the fast-fashion titan makes more than $30 billion.
The intriguing partnership between Authentic and Shein has led many to wonder about Shein's financial strengths. Shein didn't respond to requests for comment regarding their claimed revenue.
Meanwhile, Authentic's recent acquisition of Reebok is proving fruitful. In 2021, Authentic announced they'd acquire Reebok from Adidas, and the deal closed in 2022. "Our goal was to get Reebok to $5 billion within three years," Salter boasted. "We achieved our goal last year, and our new target is to boost Reebok's revenue to $10 billion in the next three years." In fiscal 2020, Reebok made $1.6 billion before the sale. Since then, sales have skyrocketed by approximately 213%.
With unprecedented growth for both Shein and Reebok, the tantalizing possibility of an IPO cannot be ignored. Authentic has previously hinted at going public, but set aside these plans in 2021 following fresh investments. Salter believes the company will be public within the next 12 to 18 months, but also mentioned that "We don't have to go public."
"We're worth 18 times EBITDA. Could we push it to 20 if we went public? Maybe. Could we reach 21? Perhaps. I'm not certain it's better to gain 18 and avoid the daily hassle of shareholder calls," Salter mused. "It's fun to stay private. At some point, we'll need to go public, but Amazon, Disney, or even Shein could be potential suitors if they decide to go public and earn an astronomical valuation."
With Authentic boasting about the accomplishments of its brands, the financial world is abuzz with speculation about a possible IPO.
Reebok's Revitalization Strategy
Reebok's turnaround under Authentic's management is nothing short of incredible, especially given the brand's dismal performance under Adidas. To reach the projected $10 billion revenue within three years, Reebok is turning its attention to basketball.
"Shaquille O'Neal is now the president of Reebok basketball," Salter said. "He's a basketball genius. And we've brought Allen Iverson onboard to court the younger generation." The brand plans to make a big splash in the basketball world.
With Authentic highlighting the success of its acquisitions, an IPO might be back on the table. Authentic toyed with the idea of going public in the past, but put the idea on hold in 2021 after raising additional funds. Salter estimated that the company will likely go public within the next 12 to 18 months, but also mentioned that "We don't have to go public."
Competing in the Fast-Fashion Arena
| Factor | Shein | Forever 21 (Pre-Collapse) ||----------------------|--------------------------------------------|----------------------------------------|| Pricing | $5–$10 items via tax-free shipping[3] | $15–$20 due to tariffs[3] || Supply Chain | On-demand, LATR system, 6,000+ suppliers[5] | Bulk imports, physical stores[3] || Tech Integration | Real-time analytics, AI trend prediction[5] | Limited digital adaptation[2][3] |
Shein's secret Sauce: Agile manufacturing, hyper-efficient supply chains, and aggressive pricing keep rivals reeling. Traditional retailers like Forever 21, with their brick-and-mortar shops and tariff-laden imports, struggle to compete.
- Authentic Brands Group's CEO, Jamie Salter, expressed interest in exploring AI technology's potential impact on fashion policy and retail business.
- The partnership between Authentic and Shein signifies a shift in the fast-fashion industry, fostered by technological advancements.
- In the future, partnerships between AI companies and fashion retailers might become prevalent, aiming to enhance supply chain efficiency and AI trend prediction.
- The financial industry is monitoring Shein's growth closely, given its tech-driven approach, as AI, industry, and finance sectors could eventually collaborate more extensively.
- Bold moves in technology policy, such as investments in AI and tech-centric partnerships, could pave the way for healthy competition amongst fashion retailers like Shein and Forever 21.
- Brookfield Asset Management, recognized for its investments in real estate and infrastructure, might consider entering the fashion retail sector if they perceive a strong partnership potential with Shein and AI technology.
- Given Shein's rapid growth, the retail industry could be disrupted by AI-fueled fashion giants, potentially inspiring other players, such as industry veterans like Temu, to reconsider their strategies in 2026.
