ORLANDO, Fl. — Authentic CEO Jamie Salter shed light on the reasoning behind Shein’s recent partnership with Forever 21 during a presentation at ICR on Monday. The executive said acquiring Forever 21, which was bought out of bankruptcy in 2020 by Authentic and mall operators Simon and Brookfield, is “probably the biggest mistake I made,” but the Shein partnership is a way to turn things around.
“I didn't see Shein and I didn't see Temu,” Salter said of the decision to buy Forever 21, which he said his board didn’t want to do. “My partner, Mr. Simon said, ‘Why are you going partners with Shein? Like, you think that's the right decision?’ I said, ‘David, it's the right decision. We cannot beat them. Their supply chain is too good. They know what's going on. They've figured this out. We need to partner with them.’”
So far, selling Forever 21 on Shein’s site has been “good” but not great, according to Salter. Other aspects of the partnership, however, are more positive.
“Being partners with Shein for the last four months: It's early. We're dating right now,” Salter said. “It's been incredible, the pop-ups have been huge home runs.”
Shein reportedly filed for a confidential IPO in November, but the retailer is still private at this time. As a private company, Shein does not publicly release financial figures, but Salter said the company is one of the fastest growing fashion retailers in the world, “if not the biggest fashion retailer in the world” and said the fast-fashion giant makes more than $30 billion.
“There's talks that they do $30 billion. Do they do $40 billion? Do they do $35 billion?” Salter said. “I'm not going to tell you exactly what they do, but I can tell you that they do a lot more than $30 billion.”
Shein did not immediately respond to a request for comment on that figure.
In addition to Authentic’s newfound partnership with Shein, Salter said the company’s recent Reebok acquisition is also bearing fruit. Authentic announced it would acquire Reebok from Adidas in 2021 and the acquisition closed in 2022.
“Our goal was to get Reebok to $5 billion within three years. We are now a year into Reebok — we finished last year with $5 billion,” Salter said. “And our goal now is to get Reebok within the next three years to $10 billion in retail revenue. And I think it just proves that, look, Reebok was always a great brand. Adidas did exactly what Adidas probably should have done, which was they used all the sort of research, technology to really make Adidas a much stronger brand in the United States at the cost of Reebok. So now, look, it's Reebok’s turn to now go back and make Reebok one of the strongest athletic brands in the world.”
In fiscal 2020, prior to the sale, Reebok made $1.6 billion, meaning sales have grown roughly 213% since that time.
Reaching $10 billion within three years would be quite the turnaround for Reebok, which suffered under years of declining sales at Adidas, and would land Reebok close to the size of athleisure powerhouse Lululemon, which plans to notch $12.5 billion in sales by 2026. How does the brand plan to get there? Basketball is part of the answer.
“There's a reason why Shaq is now the president of Reebok basketball. He knows more about the sport than most and there's a reason why we brought on Allen Iverson to sort of bring on the younger generation,” Salter said. “We plan on taking Reebok very big in the basketball world.”
With Authentic touting the success of its brands, the question of an IPO was once again raised. Authentic has teased going public in the past, but put an IPO effort on hold in 2021 after bringing in new funding. Salter said he estimates the company will be public in the next 12 to 18 months, but also said the company doesn’t “have to go public.”
“Today, we’re trading at 18 times EBITDA. … Could we get 20 if we were public? Maybe. Could we get 21? Maybe. I'm not quite sure, is it better to get 18 and not have everybody in the audience calling me every single day?” Salter said. “I don’t know, it's kind of neat to be private. And look, at some point, we have to go public, there's no doubt about it. Or we have to sell to someone like an Amazon or a Disney or maybe Shein one day if they really go public and get this crazy valuation.”
