Department Store JCPenney Merges With Sparc Group

JCPenney is joining forces with a large conglomerate to form an even bigger powerhouse in the retail space.

The department store chain is teaming up with the Sparc Group in an all-equity merger to form Catalyst Brands, the Wall Street Journal reported. The company will be led by Marc Rosen, who most recently served as the chief executive officer of JCPenney. It will be based in Plano, Texas, where JCPenney is headquartered.

With the merger, Catalyst will launch with more than 1,800 stores and $1 billion in liquidity at its disposal; JCPenney’s store count on the continental United States and Puerto Rico is 650. Sparc’s portfolio was already significant, sporting brands such as Aeropostale, Brooks Brothers, Eddie Bauer, Lucky Brand and Nautica.

Putting the brands together should give the company more leverage when it comes to its real estate. It will also allow the company to streamline its supply chain and inventory processes.

Sparc Group is a strategic partnership between Simon Property Group, Brookfield Corporation, Authentic Brands Group and Shein. Simon and Brookfield acquired JCPenney for $800 million after the department store filed for Chapter 11 bankruptcy protection, but it was kept separate from the Sparc Group umbrella.

JCPenney was hit hard by the pandemic, but its issues predated Covid-19. Debt, as well as a decline in sales as shoppers turned to other stores and e-commerce, burdened the retailer’s books.

Department stores have been a loser in the post-pandemic world, giving way to other brick-and-mortar formats. Many are being transformed into offices, schools, libraries and residential housing. Macy’s is in the process of closing 150 underperforming stores.

Catalyst has also sold the national operations of Reebok and says it is exploring options regarding the future of Century 21.

— Holden Walter-Warner