Global fast fashion retailer Shein has acquired a one-third stake in SPARC Group, an American clothing brand operator that owns several brands, including Forever 21, Nautica, and Brooks Brothers.
This marks Shein’s first investment in an established brand. While the financial details of the transaction have not been disclosed, it has been confirmed that the investment involves more than just a cash transaction. As a result of the acquisition, SPARC Group will also hold a minority stake in Shein.
The partnership is expected to be mutually beneficial. As a matter of fact, Shein’s website and mobile app will soon feature products from Forever 21, thus expanding its product offering in North America. On the flip side, Forever 21, which has historically focused on offline retail, stands to benefit from Shein’s considerable online user base of 150 million worldwide. To further integrate the brands, Shein plans to establish ‘shop-in-shops’ within Forever 21 stores in the United States to test product displays, enhance consumer experience, and streamline return and exchange services.
SPARC Group is a joint venture between American brand management company Authentic Brands Group (ABG) and Simon Property, an American real estate company specializing in shopping centres. Founded in 2016, SPARC Group has made a series of acquisitions aimed at reviving struggling brands. Among these are fast fashion brands like Forever 21, which SPARC acquired and restructured in 2020 for 81 million USD. By 2022, Forever 21’s sales had almost returned to its 2015 peak, exceeding 4 billion USD.
The deal is also part of Shein’s broader strategy for growth and diversification. Facing challenges in sustaining its rapid growth in the fast fashion sector, Shein aims to become more competitive by leveraging Forever 21’s retail and warehousing infrastructure in the United States. This is in line with recent trends that have seen consumer spending in Europe and America increasingly returning to offline channels.
Overall, the partnership between Shein and SPARC Group presents a win-win for both companies, as SPARC Group aims to enhance its online reach through Shein’s robust digital platform while Shein will benefit from SPARC’s extensive retail network to improve its offline presence.