The New York Post quotes sources close to the deal as saying that Sycamore Partners, a private equity firm, has submitted the highest bid for JCPenney in a bankruptcy auction. The firm, which owns Belks, also owns retailers Talbots, Staples, and The Limited.
Like JCPenney, Belks has also been struggling amid declining sales during the pandemic. Both were facing difficulty even before the virus struck, as consumer preferences changed and more shopping moved to online channels.
“JCP is the lifeboat for Belks, which wants to compete with Macy’s nationally,” the source told the Post.
All three bids are close
According to the newspaper, Sycamore Partners will likely land the 118-year-old retailer with a bid of $1.75 billion. The Post’s sources said Saks Fifth Avenue owner Hudson’s Bay Company is also still in the running with a $1.7 billion bid along with a pair of mall operators that offered $1.65 billion.
“The three bids are being analyzed and because there’s not a big difference between them, it means that all three are seeing a similar valuation,” a source told the Post. It will be up to the bankruptcy court to decide which firm acquires the retailer.
At last report, JCPenney operated 850 stores in 49 states and Puerto Rico. It filed for bankruptcy in May after temporarily closing most of its stores. Its stores serve as anchors at many malls across the U.S., and the department store’s fate was seen as critical to the future of many malls.
A combination with Belks could give the combined enterprise a much larger footprint. Due to the challenges facing retail, the sources told the Post that Sycamore Partners planned to rebrand 250 JCPenney stores as Belks and liquidate the rest.
Sycamore Partners offered $1 billion for a major stake in Victoria’s Secret before the pandemic struck but backed away from the deal as the U.S. economy shut down, accusing the firm’s owner of violating the terms of the agreement.
The pandemic has resulted in a wave of bankruptcies in the retail industry. Besides JCPenney, J. Crew, Neiman Marcus, Brooks Brothers, and New York & Company have filed for Chapter 11 protection in the last four months.