JCP J C Penney Company Inc

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., Aé 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)

J C Penney (NYSE:JCP)
Historical Stock Chart
From Mar 2024 to Apr 2024

J C Penney (NYSE:JCP)
Historical Stock Chart
From Apr 2023 to Apr 2024