Forever21 scales back in India

Aditya Birla Fashion and Retail Ltd (ABFRL), the company managing Forever21 in India, has started downsizing the American brand presence in the country following a decline in sales.

The Indian licensee of the American fast fashion brand is downsizing the brand’s stores and cutting costs as sales from the fast fashion business decline, a top company executive said over the weekend, reported local media.

The company noted a 14 percent sales year-on-year decline over the last calendar year’s quarter, ended in December.

Loss widened because Forever21 took a one-time inventory hit, Ashish Dikshit, managing director of ABFRL’s Madura Lifestyle business, said in an investor call on Friday. However, NSV comparisons were also affected by changes in GST rates.

Dikshit added that “Assumptions have changed for the Forever21 business. We recognize that the current business needed significant restructuring—store resizing, a new store model, renegotiations.”

As a result, ABFRL has reduced the sizes of its oldest stores and will now focus on opening new but smaller stores, he said. Most of these are stores opened by the brand before ABFRL acquired the licence for Forever21 from previous partners DLF Brands and Diana Retail.

“Size, cost, and competition impacted legacy stores in Forever21, they were much bigger than the business model deserves,” Dikshit said. “The cost was much higher than it deserved.”