For JCPenney and the SPARC portfolio of brands, it’s a new day.
Simon Property Group, Brookfield Corp., Authentic Brands Group and Shein have partnered up to form a new company, Catalyst Brands, consisting of SPARC’s Lucky Brand, Aéropostale, Nautica, Eddie Bauer and Brooks Brothers brands, as well as JCPenney.
But executives from Catalyst told WWD they are exploring “strategic alternatives” for Forever 21, which is currently part of the SPARC portfolio. That could lead to the fast-fashion retailer’s operations being sold or shut down, and Authentic retaining the brand intellectual property.
The formation of Catalyst triggered a round of top management changes. Marc Rosen, the chief executive officer of JCPenney, will become CEO of Catalyst. Michelle Wlazlo, chief merchandising and supply chain officer of JCPenney, has been promoted to brand CEO of JCPenney.
Ken Ohashi will continue leading Brooks Brothers and also assume responsibility of Eddie Bauer in his new role as brand CEO of both brands. Natalie Levy will continue in her role as brand CEO of Aéropostale, Lucky Brand and Nautica. Wlazlo, Levy and Ohashi now all report to Rosen.
In addition, Kevin Harper, formerly senior vice president of people strategy and operations at Walmart, is coming out of retirement to join Catalyst Brands as chief operating officer. And Marisa Thalberg, currently consulting chief marketing and brand officer of JCPenney, will become chief customer and marketing officer at Catalyst Brands.
When asked why Forever 21 will not be part of the Catalyst Brands platform, Rosen told WWD: “As we looked at the brand portfolio, we determined that our high-quality, iconic American brands would be the best fit.”
Forever 21 filed for Chapter 11 in 2019, a victim of over-expansion, debt and rising competition, and was was pulled out of bankruptcy by Simon, Authentic and Brookfield the following year.
Executives are exploring “strategic alternatives” for Forever 21 which could involve a sale of the fast-fashion brand.
With the creation of Catalyst Brands, SPARC continues to be involved in the operating businesses of Lucky Brand, Aéropostale, Nautica, Eddie Bauer and Brooks Brothers.
In an interview on Monday, Rosen characterized Catalyst Brands as a portfolio of six retail banners embodying “American style,” with a combined $9 billion in annual sales, 1,800 stores and 60,000 employees. JCPenney alone accounts for approximately $7 billion in volume, 50,000 associates, more than 650 stores. The overall figures do not include Forever 21.
Before merging into Catalyst Brands, JCPenney was owned by Simon, Brookfield and Authentic. SPARC, which stands for Simon Property Authentic Retail Concepts, is a partnership between Simon, Authentic and Shein.
JCPenney’s private brands, including Stafford, Arizona and Liz Claiborne, will continue to be managed by the Penney’s team.
Rosen said Catalyst has been created to harness “the collective power” of the brands by sharing data, reaching more consumers, developing new channels of distribution, growing sales and realizing synergies.
Catalyst already has “mass consumer reach” having served over 60 million customers over the past three years, he said.
The company will also be looking to save millions in costs by creating a share services organization, pooling functions such as finance, supply chain, technology, wholesaling, human resources and legal. Rosen said that through shared services, the new company will be able to leverage a lot of fixed costs across a larger volume of sales and consumers. But each brand will still operate independently when it comes to the marketing and creative functions.
Marc Rosen
“At the end of the day, it all starts with the consumer,” Rosen said.
The new structure “gives us the ability to combine the data and insights we have and help us think differently about designing and innovating product and how we can bring the six brands to life to more consumers and new channels of distribution,” the CEO said. Among the possibilities are, “creating a more personalized shopping experience, offering unified loyalty and credit card programs, and cross-selling more effectively.” That includes getting Penney’s to sell brands from the broader portfolio.
In his prepared statement, Rosen said the word “catalyst” “reflects our drive to accelerate innovation” and “amplify the impact of this powerhouse portfolio. Together, we bring scale, expertise, and broad appeal to customers across America.
“With offerings that include business and formal fashion from Brooks Brothers to casual apparel for teenagers and young adults from Aéropostale, to outdoor recreation clothing and gear from Eddie Bauer to everyday style for every family from JCPenney, and more, Catalyst Brands has expansive reach across market and customer segments,” Rosen added. “Catalyst Brands will integrate additional complementary strengths including strong product design and sourcing capabilities, powerful supplier relationships, and growing use of data-driven and AI technology to enhance its supply chain and inventory management capabilities and to deepen consumer relationships.”
The CEO said the company has “a clean balance sheet and strong liquidity” and is in “a great position to move forward.” It’s based inside JCPenney’s headquarters in Plano, Texas, which is near Dallas, and also has offices in New York, Los Angeles and Seattle.
Commenting on recent performances of some of the Catalyst Brands, Rosen said Brooks Brothers has been “invigorated” and experiencing comp store growth. Lucky is being repositioned to “bring the denim lifestyle to life” while seeing “strong growth, especially in wholesaling.” And Aéropostale is expanding in the wholesale channel and recently launched a new app.
JCPenney’s operations turned profitable in the third quarter, despite a dip in sales volume. Still, Rosen said Penney’s has captured more consumers and has built sales momentum through its “Really Big Deal” promotions featuring celebrity partnerships with Shaquille O’Neal, Gabrielle Union-Wade, Walker Hays, Martha Stewart and Jenny Martinez during Thursday night football games on Prime Video.
Penney’s operating income in the quarter ended Nov. 2 came to $2 million and compared with an operating loss of $10 million a year earlier. The company narrowed its net loss to $17 million from $30 million. Net sales dipped to $1.41 billion from $1.53 billion, though the company has indicated that its Really Big Deal offers exceeded expectations for top-line sales impact.
Asked if Catalyst Brands could one day expand its portfolio with additional brands, a representative said: “It’s not out of the question that there could be acquisitions. But right now, the focus is on the success of Catalyst Brands and the existing brands within the portfolio.”
Simon is considered the nation’s largest owner and operator of shopping centers. Brookfield also has a vast portfolio of shopping centers. Authentic is a major brand development, marketing, and entertainment company, and Shein is a Chinese fast-fashion retailer.
