J.C. Penney is moving in the right direction, but it is still a work in progress. That’s the assessment of David Simon, CEO of Simon Property Group (SPG), the co-owner of the department store chain, as told to analysts on an earnings call this week.
SPG and Brookfield Property Partners (BPP) acquired Penney out of bankruptcy last year and expected the chain to put itself on a positive path once free of the massive debt load it had been carrying for years.
Mr. Simon said Penney’s co-owners are pleased with early results from the retailer as it has performed ahead of plan. He pointed to strong liquidity and low debt levels as strengths as the company begins its rebuilding process.
“The first goal is to rightsize the company, strengthen the financial capabilities, repairing a vendor relationships that we need to do, stabilize the morale and so on,” said Mr. Simon. “Obviously, that’s harder to do in COVID, when people are working remotely. But we’ve …. I’ve been proud of the execution, and so far, the results.”
Penney announced last week that it is cutting 650 jobs, about 1.5 percent of its workforce. The job cuts affect employees at the retailer’s corporate headquarters, field offices and stores. This follows earlier job cuts and store closures announced earlier this year.
Mr. Simon said growth will be the focus going forward, starting with rebuilding ties with vendors that may have felt burned by Penney’s bankruptcy, while also bringing in new brands.
He said it was normal for vendors to be somewhat leery when working with a retailer post bankruptcy and Penney was “seeing more and more confidence from the vendor community” as time goes on.
Mr. Simon also spoke with some excitement about the prospects of new brands, including those owned by Authentic Brands Group (ABG), which could be in stores late this year or early 2022.
Early reports about the bidding process for Penney had ABG joining SPG and BPP in making an offer. ABG was not part of the $800 million deal in the end, but the three companies have a history of working together to buy distressed retailers on the cheap, including Aeropostale and Forever 21. Simon and ABG have teamed up to acquire the Brooks Brothers, Eddie Bauer and Lucky Brand.
