Could Authentic Brands be the lynchpin in J.C. Penney’s turnaround?
Simon Property Group and Brookfield Property Partners were announced as the new owners of J.C. Penney last week. This week, the two mall operators are reportedly in talks with Authentic Brands Group (ABG) to join them in parenting the department store chain.
The deal being discussed between the three parties, according to reports, doesn’t appear to include ABG buying a piece of Penney, but would instead have it contribute brands from its portfolio to the department store’s in-store and online merchandise selection. The licensing firm owns the rights to Aeropostale, Forever 21, Frye, Greg Norman, Juicy Couture, Nautica, Nine West and other fashion brands. ABG also owns the rights to many celebrity brands, and it acquired Sports Illustrated in May of last year.
Early reports about the bidding process for Penney had ABG joining with Simon and Brookfield in acquiring Penney. In the end, however, ABG was not part of the $800 million deal ($300 million in cash and $500 million in new term debt) to acquire “substantially all” of the retailer’s operating and retail assets. The two mall operators and ABG have worked together before to acquire distressed retailers, including Aeropostale and Forever 21. Simon and ABG have teamed up this year to acquire the Brooks Brothers and Lucky Brand businesses.
ABG announced last month that it had received $600 million from BlackRock, General Atlantic and Leonard Green & Partners to assist it in acquiring brands and retailers that have found themselves in tenuous financial positions due to the coronavirus pandemic and other factors.
Jamie Salter, ABG CEO, told CNBC last month that he and his company were “in the first inning” in pursuing new opportunities.
Mr. Salter, who sees brick and mortar as continuing to be an important part of retailing well into the future, said in the same interview, “The brands that don’t have stores are harder to market and expand globally. You need a footprint and a supply chain. Those are two critical parts to running a business.”
- Authentic Brands in talks to join J.C. Penney takeover – TheRealDeal
- Authentic Brands Could Join J.C. Penney Buyout – The Motley Fool
- Our Business – Authentic Brands Group
- J.C. Penney rescued. Will it now find success and save the mall, too? – RetailWire
- Barneys’ savior Authentic Brands is sitting on about $1 billion in cash and on the hunt to buy more troubled retailers – CNBC
- Authentic Brands raises $600M for retail acquisitions – TheRealDeal
- Simon sees a big and profitable upside in acquiring retail tenants – RetailWire
- Who will come to J.C. Penney’s rescue? – RetailWire
DISCUSSION QUESTIONS: Is brand merchandise a problem for J.C. Penney in attracting new, particularly younger, shoppers to its stores and site? Do you see a deal with Authentic Brands Group as being helpful in reestablishing Penney as a fashion destination?