Retail

Fast-fashion's rapid growth starts to slow

Forever 21 sales decline drastically
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Forever 21 sales decline drastically

The rocket ship that fast-fashion retailers have ridden during the past few years appears to be running out of fuel — at least if you rely on a recent court document.

EZ Worldwide Express, a shipping firm that handled clothing deliveries for Forever 21, has cut ties with the low-price retail chain because business tapered so dramatically that it was no longer profitable to work with them, according to The Wall Street Journal.

The report, citing a court document filed in May, said EZ Worldwide Express' weekly sales to the retailer have ranged from $352,483 to $428,764. Those figures were "drastically lower than the same five-week period last year, where weekly sales ranged from $629,817 to $780,730," the document said, according to the Journal.

EZ Worldwide filed for Chapter 11 bankruptcy protection in January. Forever 21 accounted for nearly half its annual revenue of $25 million to $30 million, according to the newspaper.

In a statement to CNBC, Forever 21 said, "Forever 21 and EZ Worldwide Express came to an agreement to separate, after EZ's difficult financial conditions meant that it could no longer provide the same delivery services."

"Forever 21 looked at different financing options to assist EZ during its difficult financial time in order to continue the relationship, but were unable to come to an agreement," the statement continued. "Accordingly, Forever 21 transitioned to other delivery providers and accepted the termination agreement with EZ, in order to continue to provide the exceptional experience our customers have come to expect from us."

A person close to the matter disputed the paper's report. Forever 21 worked with EZ throughout its bankruptcy to develop a debt or equity financing agreement that would help it emerge from Chapter 11, this person said. The source said that EZ did not terminate its relationship with Forever 21, and that the parties instead agreed to separate, at which time Forever 21 began using other shipping companies.

Forever 21 is privately held and does not release financial results. The chain, which operates about 730 stores, has been shutting down some of its large locations.

The Journal report is the latest sign that fast-fashion, a category that stole market share from traditional retailers and caused many shoppers to expect constantly changing, in-season products, is starting to slow. During the second quarter, sales at H&M rose just 5 percent in local currencies, despite the retailer operating 438 additional stores at the end of May from the previous year.

Due to this slowness, which analysts said could partly be the result of unseasonably cool weather, the retailer is grappling with excess inventories that could force it into running unplanned promotions during the current three-month period.

Inditex, which operates the popular Zara chain, continues to perform well, with both its sales and profits climbing in the most recently ended quarter.

Update: This story has been updated to include comment from Forever 21.