A zombie mall store king is born: JCPenney merges with Forever 21 owner
Malls have been facing significant problems from store closings and reduced foot traffic since before the pandemic.
New York (CNN) — JCPenney is merging with a company that owns a number of other once-bankrupt clothing stores, including Forever 21 and Brooks Brothers, to form a new company that will hold significant sway over the future of America’s malls.
The 123-year-old department store chain anchors the new company — a joint venture with Sparc Group, which also owns Lucky Brand, Eddie Bauer, Nautica and Aeropostale. The merger will form a new company called Catalyst Brands, representing a gamble that combining the beleaguered brands will create a new powerhouse of mall staples … that also happen to have America’s largest mall operators as major financial backers.
Catalyst represents a new chapter for JCPenney, the historic chain that filed for bankruptcy in the height of the pandemic in 2020. It was later bought by mall-owner Simon Property Group and real estate developer Brookfield in a $1.75 billion deal.
Meanwhile, Sparc Group, which is also financially backed by Simon, has grown its portfolio of brands that have exited bankruptcy and are in the midst of being revitalized.
Combining JCPenney and the other companies “allows synergies to be strengthened through cost reduction, cross-marketing activities, and talent sharing,” according to Neil Saunders, retail analyst and managing director at GlobalData Retail.
Malls have been facing significant problems from store closings and reduced foot traffic since before the pandemic. That’s why Simon and Brookfield have made investments in the bankrupt stores — by keeping them open, they at least guarantee, for a time, that they’ll maintain some key tenants.
The all-equity transaction to form Catalyst launches with $9 billion in revenue, 1,800 stores and 60,000 employees, according to a press release. JCPenney CEO Marc Rosen is leading the new company, which will be headquartered at the department store’s offices in Plano, Texas.
“Our relationships with more than 60 million customers and the deep data we have create a compelling consumer value proposition across our brands,” Rosen said in a release. “We can design a more personalized shopping experience, offer unified loyalty and credit card programs, and ultimately, cross-sell more effectively.”
“The strategy being deployed is not unusual,” Saunders told CNN. “There are a lot of brand management companies that have consolidated a number of struggling brands with the aim of creating something greater than the sum of the parts.”
Catalyst also said that it’s exploring “strategic options” for Forever 21 and has sold the US operations of Reebok, although it didn’t give further details.
The-CNN-Wire
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