Are JCPenney’s owners a good fit to take over Kohl’s?
Simon Property Group and Brookfield Property Partners, co-owners of JCPenney, have joined a growing list of bidders looking to acquire Kohl’s.
The two mall owners in recent years have jointly bid, sometimes with Authentic Brands Group as a third partner, to snap up struggling retailers at discount prices.
The bid, first reported by the New York Post, if successful would be a deviation from past deals for the two companies.
Kohl’s, which has been under pressure from activist investors to return greater shareholder value, is not in bankruptcy as Penney was in 2020. Simon and Brookfield are said to have bid $68 a share ($8.6 billion total) to acquire the retailer. The retailer’s shares were up 3.03 percent to $60.39 in premarket trading this morning.
Simon and Brookfield are also not looking to acquire a retailer that is a key tenant in their enclosed mall properties. Kohl’s has differentiated itself by its choice to operate standalone locations outside of malls where rivals such as Penney and Macy’s operate.
A single “well-placed source” told the Post that Simon and Brookfield believe that they will be able to maintain Kohl’s and Penney as separate businesses but will be able to streamline some operations to cut costs between the two chains. The plan is to cut costs by $1 billion over the first three years of operations.
Simon and Brookfield are joining a long list of bidders for Kohl’s including Franchise Group, owner of Vitamin Shoppe, Hudson’s Bay, the parent of Saks Fifth Avenue, Sycamore Partners and Acacia Research. More than 25 companies have reportedly expressed interest in Kohl’s, which could expand the bidding parties even further.
Kohl’s announced last month at its Investor Day that it plans to open 100 smaller stores over the next four years. The stores, which would measure about 35,000-square-feet versus its typical 80,000-square-foot units, are expected to give the retailer access to locations where it previously didn’t fit.
Michelle Gass, CEO of Kohl’s, said that the smaller stores will provide curated experiences based on local tastes.
“We’ve created a new test store in the Seattle area,” she said. “In that region, the store reflects local customer preferences, such as a greater emphasis on outdoor apparel. In the South, that same size store would carry more warm weather product, such as year-round swim sandals and lighter weight apparel.”
- JCPenney owners offer to buy archrival Kohl’s for $8.6B – New York Post
- Kohl’s receives an unsolicited buyout bid, others may follow – RetailWire
- Does this activist investor know what’s best for Kohl’s? – RetailWire
- Will smaller, more localized stores work for Kohl’s? – RetailWire
- Will JCPenney’s core customers come back and show their love? – RetailWire
- Simon says J.C. Penney is ready to become a 21st century retailer – RetailWire
- Will J.C. Penney be renewed under new ownership? – RetailWire
- J.C. Penney rescued. Will it now find success and save the mall, too? – RetailWire
DISCUSSION QUESTIONS: What do you think needs to be fixed at Kohl’s? Would Simon Property Group and Brookfield Property Group make better owners than some of the others rumored to have an interest in acquiring the chain?