Sycamore wants to take a bite of J.C. Penney

After rejecting Victoria’s Secret, Sycamore courts filed-for-bankruptcy J.C. Penney

As the coronavirus razed brick-and-mortar retailers, private equity firm Sycamore Partners walked away from a $525 million pre-pandemic deal to buy a majority stake in the lingerie business of Victoria’s Secret.

Now Sycamore Partners is in early talks to acquire J.C. Penney out of bankruptcy if the department store’s negotiations with creditors fail, per Reuters. The department store chain said it plans to close 154 stores permanently and perhaps more after filing for bankruptcy protection in May. 

As with Victoria’s Secret, the pandemic has only compounded the multitude of issues bogging down the retailer: J.C. Penney struggled for years with dwindling sales, massive debt, and customer defections. Now with poorly developed e-commerce operations, the coronavirus is dumping more salt on the wound. Certainly Sycamore has its work cut out—and no doubt much of its portfolio, which focuses on retail and consumer, is feeling the same pain.

It’s unclear exactly how much Sycamore would pay for a J.C. Penney deal, though the department store is also in talks with its landlords, including Brookfield Asset Management and Simon Property Group, about a deal which could include a collaboration between the three, per the report.

The news comes after Sycamore made headlines for its interesting break up with Victoria’s Secret. The buyout firm struck a deal in February, just as markets were reaching new highs, to acquire a majority of the lingerie brand from struggling retailer L Brands. But as the coronavirus worsened in late April, Sycamore sought to break the deal. L Brands filed a counter lawsuit, but eventually agreed to terminate the tie-up to avoid “costly and distracting litigation to force a partnership with Sycamore.”

A date to watch: July 15. Should J.C. Penney fail to convince enough lenders of its reorganization plans by then, the retailer will have to pursue a sale.

In case you missed it: Reddit founder and former CEO Alexis Ohanian said on Friday that he would step down from the company’s board Friday to make way for a black replacement. “It’s long overdue to do the right thing,” he said.