The owner of several well-known but troubled retail brands, such as Brooks Brothers and Forever 21, is partnering with century-old department store JCPenney to form a new company that has the potential to completely change the future of shopping malls in the United States.
JCPenney and Sparc Group, a portfolio business that also owns Lucky Brand, Eddie Bauer, Nautica, and Aeropostale, are joining forces through the merger. By rebranding once-popular but faltering retail identities, the new business, which will go by the name Catalyst Brands, hopes to solidify its place in the mall ecosystem.
This strategic partnership is a turning point in JCPenney’s recovery. The 123-year-old department store, which was once a titan of American retail, declared bankruptcy in 2020 as a result of the pandemic’s economic devastation. However, JCPenney has steadily regained its footing after being acquired by mall titans Brookfield and Simon Property Group. Simon is also the founder of Sparc Group, which has brought several other brands back from the verge of bankruptcy.
The merger is being seen as an attempt to revitalize brands that, despite their difficulties, have a great deal of room to grow. Retail analyst Neil Saunders predicts that Catalyst companies will use the combined resources of these companies to save expenses, simplify operations, and take advantage of cross-marketing opportunities.
Saunders clarified, “Bringing these companies together helps amplify efficiencies across the board,” “With shared resources, the company can bolster its marketing and customer engagement efforts, all while improving its overall bottom line.”
Store closures and dwindling foot traffic have plagued American malls for years. This problem existed before the pandemic. Keeping a steady tenant lineup at their malls has been an important tactic for Brookfield and Simon Property Group. Even though the stores themselves have not always been doing well, these brands’ continuous existence guarantees a consistent presence in retail settings.
With 60,000 employees, 1,800 locations across the United States, and $9 billion in revenue, Catalyst Brands begins its adventure with amazing scale. CEO Marc Rosen will lead the company, which will have its headquarters in Plano, Texas, which is home to JCPenney.
“Our extensive customer base of over 60 million, paired with our data-driven insights, gives us a unique advantage to deliver a more personalized shopping experience,” Rosen said in a statement. “By unifying loyalty programs and creating a more cohesive cross-brand marketing strategy, we believe we can drive growth in the years ahead.”
The merger is in line with a well-known trend in the retail industry. In order to generate synergy where separate brands may have failed, analysts like Saunders point out that combining underperforming businesses under a single management umbrella is a technique that has previously succeeded for other retailers.
Catalyst has already sold off Reebok’s U.S. operations and has signaled that it may look into additional “strategic possibilities” for some of its properties, such as Forever 21. For now, it is unknown how far these ideas will go.
