Over the last 4 or 5 months, the retail sector has whirled around store closures, disappointing sales numbers and Chapter 11 filings. While brands have struggled to survive amidst all this, big mall owners too have been hit badly.
And nobody would know it better than mall owners in the US.
The cases in the US are surging every day and if things don’t improve fast there could be another phase of lockdown. As per latest reports, death toll in the country has touched 1,43,835 and there are as many as 39,61,556 COVID-19 cases. That’s worrying numbers by any standards.
Brooks Brothers, J. Crew, JCPenney and RTW Retailwinds are few among the many US fashion bigwigs who have already filed for Chapter 11 and many are still in the pipeline. None of these can afford another lockdown.
The mall owners of US are now all set to rescue these brands that were once the biggest attractions of their malls.
Simon Property Group, the biggest American mall owner, which reportedly has around US $ 8.5 billion of liquidity on its balance sheet, has joined hands with Authentic Brands Group (ABG) to help fund Brooks Brothers.
Reportedly, the US $ 80 million loan from the Simon-ABG association comes with no interest. Also, Brooks Brothers’ branding will be used as collateral to the lenders.
According to court documents, in case Brooks Brothers goes completely insolvent, the duo of Simon Property Group and ABG will keep the intellectual property.
Besides, they are set to save some other brands too! Both have planned to put a bid of US $ 191 million for another bankrupt brand Lucky Brand. More details are awaited.
Together with another mall owner Brookfield Properties, both Simon and ABG are also planning to buy JCPenney out of bankruptcy.
Here it is important to note that the trio came together earlier also to save Forever 21 by putting US $ 81 million.
Meanwhile Brookfield has said that it is creating a fund and aims to spend US $ 5 billion to help many struggling retail firms.
While stating that these mall owners are acting like their own private equity firms, Scott Stuart, CEO, Turnaround Management Association, said “They are sitting on a lot of cash and are testing the waters.”
Though it always sounds good when someone is out there to save bricks-and-mortar stores, yet there have been very few instances where mall owners have succeeded to take out the retail giants out of bankruptcy and give them back their lost glory.
So there’s always that tinge of skepticism. A little more time needs to be given to understand how much will this strategy work.