Forever 21 Shipping Firm Drops Retailer, Citing Slow Business
27 June 2016 - 9:10PM
Dow Jones News
A shipping firm that delivered clothing to Forever 21 Inc.
stores has abandoned the retailer, saying business has slowed so
much that the work is no longer profitable.
EZ Worldwide Express is sizing down after canceling Forever 21's
shipping contract. Under that deal, EZ Worldwide Express agreed to
be Forever 21's exclusive carrier for at least 171 stores until
2019, according to documents filed in U.S. Bankruptcy Court in
Newark, N.J.
The Elizabeth, N.J., company, filed for bankruptcy in January.
Since then, it has laid off about 200 workers and plans to sell
about 140 vehicles and other equipment, including tractors,
forklifts and conveyor belts that it no longer needs after the loss
of Forever 21's business.
Payments from Forever 21 contributed nearly half of EZ Worldwide
Express's annual revenue of between $25 million and $30 million,
but the retailer's "business has declined precipitously," EZ
Worldwide Express lawyers said in earlier court documents.
"[Weekly] sales to Forever 21 have ranged from a low of $352,483
to a high of $428,764," EZ Worldwide Express lawyers said in a
document filed May 20. "These numbers are drastically lower than
the same five week period last year, where weekly sales ranged from
$629,817 to $780,730."
Forever 21 representatives and the lawyer who has represented
the retailer in EZ Worldwide Express's bankruptcy didn't respond to
requests for comment. The Los Angeles-based company operates more
than 730 stores globally, according to its website.
Many fast-fashion retailers that hurriedly get trending clothing
styles onto the shelves at cheap prices are struggling with changes
in shopping patterns, with the rapid growth in e-commerce upending
traditional distribution patterns that have been built around
physical stores. Profit margins for many store operators are
withering as they try to keep inventory in position to deliver both
directly to consumers and to retail outlets, leaving many holding
too much inventory and facing higher shipping costs.
Teen clothing retailers have been hit especially hard. Several
chains, including Wet Seal Inc., AĆ© ropostale Inc., Delia's Inc.
and Deb Shops, have turned to bankruptcy protection in recent
years.
EZ Worldwide Express President Ajay Aggarwal owns the company
with his brother, Vijay. The pair started the business in 1989 with
one retail location in Jersey City called EZ Mailing. In the 1990s,
the company grew as the garment and apparel industry hired it to
deliver pallets of products to retailers like Macy's Inc., Wal-Mart
Stores Inc. and J.C. Penney Co., court papers said.
EZ Worldwide Express officials who put the business in chapter
11 protection in January are gradually cutting the company's
operations across the country. It has distribution centers and
other operations in Los Angeles, Santa Fe Springs, Calif., Dallas
and Newark.
Court papers show that EZ Worldwide Express's business will
likely downsize to about 225 workers and operate profitably by
keeping business with customers that include Disney, Wal-Mart and
H&M.
Paul Page contributed to this article.
Write to Katy Stech at katherine.stech@wsj.com
(END) Dow Jones Newswires
June 27, 2016 15:55 ET (19:55 GMT)
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