Sycamore Partners Plans to Buy J.C. Penney for $1.75B

Sycamore Partners, the private equity firm that recently backed out of a deal to buy Victoria’s Secret, has a good chance of winning an auction to buy the department store chain J.C. Penney out of bankruptcy, MarketWatch reported. The New York-based firm bid $1.75 billion for the department store chain. If it wins the auction, Sycamore plans to merge J.C. Penney with Belk, another struggling department store chain mostly based in the South.

This plan would involve rebranding about 250 J.C. Penney stores as Belk stores in markets where the two department stores don’t overlap. The rest of the J.C. Penney locations would be liquidated. MarketWatch reported that Belk CEO Lisa Harper would run the combined entity.

Hudson’s Bay Co. is also in the running to acquire J.C. Penney with an offer of $1.7 billion, and mall operators Simon Property and Brookfield Property have teamed up with a $1.65 billion bid, according to MarketWatch.

Total Retail's Take: J.C. Penney has been in business for over 100 years, yet its struggles — and that of many other department store chains — have been well documented in recent years. The COVID-19 pandemic seems to be the fatal blow for many retail chains, already weakened by the ongoing shift of consumers to shopping online, as well as more and more brands bypassing retailers and selling their goods direct to consumers. However, the idea of merging Belk with J.C. Penney to better compete with Macy's is a very interesting concept. Could a combined Belk/J.C. Penney prove to have the resources, market reach, and operational efficiencies to put a dent in Macy's business? We will have to wait to see if Sycamore Partners wins the auction for J.C.Penney, and if it does, what the final plans will be for the iconic retail chain.