JCPenney weathered a bankruptcy, store closings and a CEO out of Silicon Valley 鈥 all followed by continual revenue declines.
Now, the company, whose history stretches back more than 100 years, is getting another shot at rebirth.聽
The 650-location department store chain joined forces with the company behind names such as Eddie Bauer and A茅ropostale to create a company called Catalyst Brands. It will be based in Plano, Texas, and led by Marc Rosen, former head of JCPenney.
Customers enter a JCPenney store Sept. 1, 2023, at The Shops at Tanforan in San Bruno, Calif.
Once seen as a top player, JCPenney made several attempts to reinvent itself over the past decades as聽online retailers, younger brands and big-box companies eroded its sales.
Under the Catalyst Brands umbrella, it looks to leverage complementary strengths in key retail areas, such as product design, sourcing and new technology tools. That could mean changes to how and where items are sold and even new store formats, Rosen said in an emailed statement.
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The tricky part is making it work. These brands face challenges including pressure from rivals and changing consumer tastes.
鈥淭he real question is, 鈥橭K, what are they going to do now?鈥 鈥 said Katherine Black, a partner at global strategy and management consulting firm Kearney who leads food, drug and mass market retail. 鈥淚f they build the right platform for getting those brands to outpace their growth, then they鈥檝e got a really interesting story.鈥
That could be harder for JCPenney, Black said, as department stores face particular challenges. Macy鈥檚 recently announced store closures, for example.
Family of varied brands
The new company 鈥 a tie-up with Sparc Group 鈥 has a diverse set of brands with a broad set of target customers.
Brooks Brothers offers options for shoppers looking for something more formal while A茅ropostale appeals to teens and young adults. Lucky鈥檚 roots are premium denim along with what it calls 鈥淎mericana and self-expression.鈥 Eddie Bauer and Nautica stir thoughts around the outdoors. JCPenney? Think 鈥渆veryday style for every family.鈥
It鈥檚 not entirely clear how all the brands could be used together. Rosen said the company details are coming together, but the range of products will be available in more places for more people more easily.
鈥淲e can imagine opportunities like brand pop-up shops inside JCPenney stores, for example, or opportunities to take brands that have been exclusive to JCPenney, like Liz Claiborne or Arizona, and extend their reach through wholesale,鈥 Rosen said. 鈥淲e鈥檙e also thinking through aspects like shared loyalty programs and credit cards that will make the customer experience more rewarding. And, of course, we also have our eye toward innovation 鈥 such as testing new store formats 鈥 all with the customers in mind.鈥
These brands faced challenges for years. Eddie Bauer and A茅ropostale were among popular mall brands in the 1990s and 2000s, but since lost traction with shoppers. Lucky Brand and Brooks Brothers were among retailers that filed for bankruptcy during聽the COVID-19 pandemic.
Competitive challenges
JCPenney reported that net sales fell 8% in a recent quarter, a slight improvement from earlier in the year, though the department store chain posted an operating profit. Foot traffic improved, and it benefitted from new promotions. It had net sales of roughly $7 billion in its last fiscal year that ended Feb. 3聽鈥 less than half of the number of sales it had a decade ago.
In 2011, Apple stores guru Ron Johnson arrived as CEO. His tenure saw challenges in ways it would never recover, including billions in lost revenue amid changes in pricing strategies and store designs. Three more CEOs during the 2010s couldn鈥檛 return JCPenney to its former sales levels as it racked up net losses.
In 2023, JCPenney ranked No. 63 based on annual sales in a National Retail Federation report. Two players in the top 10 were growing rivals for JCPenney鈥檚 customer base.
鈥淲here is that shopper going?鈥 said Ray Wimer, professor of retail practice at Syracuse University. 鈥淚f you look, you look at Walmart and Target, that鈥檚 where they鈥檙e going.鈥
Target is a known player in the apparel market and Walmart recently聽invested in clothing, Wimer said, and it鈥檚 not going to be easy to get back market share.
鈥淲ith Catalyst Brands, we鈥檙e bringing together a unique proposition of iconic brands with strong momentum that we can accelerate, further and faster, together,鈥 said Rosen, who joined JCPenney in 2021.
More heft could help with Catalyst Brands, which launches with combined sales of more than $9 billion and 1,800 store locations. It delivers bigger customer numbers, and that can power technology and the future. The company pointed to data-driven and artificial-intelligence efforts to enhance its supply chain and inventory management capabilities 鈥 and deepen consumer relationships.
