Winnipeg Free Press

Winnipeg Free Press (Newspaper) - January 27, 2025, Winnipeg, Manitoba B4 MONDAY JANUARY 27, 2025 ● BUSINESS@FREEPRESS.MB.CA ● WINNIPEGFREEPRESS.COM BUSINESS JCPenney is trying to reinvent itself again. Will it work this time? J CPENNEY has weathered bank- ruptcy, store closings and a CEO straight out of Silicon Valley — all followed by continual revenue declines. Now, the storied U.S. retail company is getting another shot at rebirth. The 650-location department store chain has joined forces with the com- pany behind names such as Eddie Bau- er and Aéropostale to create a company called Catalyst Brands. It will be based in Plano, Texas, and led by Marc Rosen, former head of JCPenney. This new path comes after several attempts by JCPenney to reinvent it- self over the past decades. While once seen as a top player, its sales have been eroded by online retailers, younger brands and big-box companies. JCPenney under the Catalyst Brands umbrella is looking to get stronger with scale as it leverages complementary strengths that cover key retail areas, such as product design, sourcing and new technology tools. It could mean changes to how and where items are sold and even new store formats, ac- cording to Rosen in an emailed state- ment. The tricky part is making it work. These brands face clear challenges such as pressure from rivals and changing consumer tastes. “The real question is, ‘OK, what are they going to do now?’” said Katherine Black, a partner at global strategy and management consulting firm Kearney who leads food, drug and mass market retail. “If they build the right platform for getting those brands to outpace their growth, then they’ve got a really inter- esting story.” That could be harder for JCPenney, Black said, as department stores have seen particular challenges. Macy’s re- cently announced store closures, for example, as it looks to improve its pros- pects. Family of varied brands The new company — a tie-up with Sparc Group — has a diverse set of brands with a broad set of target cus- tomers. Brooks Brothers offers options for shoppers looking for something more formal while Aéropostale appeals to teens and young adults. Lucky’s roots are premium denim along with what it calls “Americana and self-expression.” Eddie Bauer and Nautica stir thoughts around the outdoors. JCPenney? Think “everyday style for every family.” It’s not entirely clear how all the brands could be used together. Rosen said the company details are coming together, but the range of products will be available in more places for more people, more easily. “We can imagine opportunities like brand pop-up shops inside JCPenney stores, for example, or opportunities to take brands that have been exclusive to JCPenney, like Liz Claiborne or Ari- zona, and extend their reach through wholesale,” Rosen said in the email. “We’re also thinking through aspects like shared loyalty programs and cred- it cards that will make the customer experience more rewarding. And, of course, we also have our eye toward in- novation — such as testing new store for- mats — all with the customers in mind.” These brands have faced challenges for many years. Eddie Bauer and Aéropostale were among the more popular mall brands in the 1990s and 2000s, but have since lost traction with shoppers. Amid the chal- lenges of COVID-19 for physical retail, Lucky Brand and Brooks Brothers were among those that filed for bankruptcy. Competitive challenges JCPenney has come off a quarterly report with mixed results. Net sales fell eight per cent, a slight improvement from earlier in the year, while the department store chain post- ed an operating profit in the recent per- iod. Foot traffic improved and it bene- fitted from new promotions. It had net sales of roughly US$7 bil- lion in its last fiscal year that ended Feb. 3, 2024, less than half of its sales a decade ago. This is the latest in many turnaround efforts. A key moment came in 2011, when Apple stores guru Ron Johnson arrived as CEO. His tenure saw challenges in ways it would never recover, including billions in lost revenue amid changes in pricing strategies and store designs. Three more CEOs during the 2010s couldn’t return JCPenney to its former sales levels as it racked up net losses. In 2023, JCPenney ranked No. 63 based on annual sales in a U.S. National Retail Federation report. Two players in the top 10 have been growing rivals for JCPenney’s customer base. “Where is that shopper going?” said Ray Wimer, professor of retail practice at Syracuse University in New York state. “If you look, you look at Walmart and Target, that’s where they’re going.” Target has long been a known player in the apparel market. Walmart in par- ticular has invested recently in cloth- ing, Wimer said, and it’s not going to be easy to get back market share. “It’s a really tough environment,” Wimer said. Rosen, who joined JCPenney in 2021, said retail has always been a dynamic industry and keeping pace with cus- tomer needs and interests is key. “With Catalyst Brands, we’re bring- ing together a unique proposition of iconic brands with strong momentum that we can accelerate, further and faster, together,” Rosen said in the statement. “Our combined scale and resources let us invest in their growth.” Catalyst Brands launches with com- bined sales of more than US$9 billion and 1,800 store locations. Prior to Catalyst Brands’ creation, there already were some connec- tions. JCPenney was owned by Simon, Brookfield and Authentic. Sparc is a partnership between Simon, Authentic and Shein. Simon and Brookfield are both key mall companies where these brands often reside. Scaling up More heft could help with Catalyst Brands. It delivers bigger customer numbers and that can power technology and the future. The company pointed to data-driven and AI efforts to enhance its supply chain and inventory manage- ment capabilities — and, more import- antly, to deepen consumer relationships. “We can design a more personalized shopping experience (and) offer unified loyalty and credit card programs and, ultimately, cross-sell more effectively,” Rosen said. It takes a lot of investment to stay current with the right technology trends — and with the right capabilities in data and analytics and marketing, Black said, while noting more traffic can lead to higher-profit services. “I think that scale is a good thing in retail right now,” Black said. “It’s not starting from scratch … and this gives more scale. So from that perspective, I do think that makes sense.” “With a clean balance sheet, we’re in (a) great position to move forward,” Rosen said in the statement. It’s an interesting addition for the Dallas region weathering some head- winds. The Container Store based in Coppell recently filed for bankruptcy and Dick- ies in Fort Worth is shifting its head- quarters to California, according to a statement in November. And then there’s the Neiman Marcus Group, a Dallas department store that became part of Saks Global at the end of last year. It was a retailer born in Dallas more than a century ago and still has a key store in the heart of downtown. JCPenney, whose history also stretch- es back more than 100 years, turned to bankruptcy during the COVID-19 pan- demic — leading to the new owners and the new merger. “They’re hoping for a redemption story,” said Ed Fox, a professor at South- ern Methodist University in Texas. “It would be a very nice local story to see them thrive.” — Dallas Morning News BRIAN WOMACK JUSTIN SULLIVAN / GETTY IMAGES/TNS FILES Customers enter a JCPenney at the Shops at Tanforan in San Bruno, Calif. The longtime U.S. department store chain has joined forces with the parent company of Eddie Bauer and Aéropostale. ‘Soup drops’ are General Mills’ latest strategy to revive waning Progresso U.S. nighttime talk show host Jimmy Fallon was less than eager to try Progresso’s chicken noodle soup-fla- voured hard candies, or “soup drops,” which General Mills released earlier this month. “I tried it,” The Tonight Show host said last week, “and it sucks.” Pun intended or not, that seems to be the point of this publicity stunt: attention, at any cost, for the strug- gling brand. General Mills is releasing a run of the soup-flavoured lozenges in limited quantities online for just a few Thurs- day mornings in January. Progresso is relying on a combina- tion of exclusivity and must-try weird- ness to put more eyes on the brand and more cans in grocery carts. It seems to be working: the first batch sold out in less than an hour last week. “We took the beloved flavours of our Progresso chicken noodle soup and packed them into a fun, savoury candy soup drop for a totally new way to enjoy the taste you love whenever and wherever you want,” MC Com- ings, business unit director for Pro- gresso at Golden Valley, Minn.-based General Mills, said in a news release. The cans of soup drops, which run US$2.49 plus shipping, also come with a regular can of Progresso’s chicken noodle soup. Progresso is a small part of General Mills’ overall portfolio, representing about five per cent of retail sales, ac- cording to Jefferies research. But it remains a big name in the soup aisle, with about 16 per cent market share. Competitor Campbell’s takes in nearly half of all retail dollars spent on soup. Campbell’s and Progresso both saw soup sales decline throughout last year and 2023, according to Nielsen data. And where Progresso did see some sales spikes, it was from price increases. The brand has struggled to consistently sell more soup year over year. For several years, General Mills has warned Progresso is at risk of being worth more on paper than it could fetch when sold. The company last re- duced the book value of the brand by US$132 million in 2018 “as a result of lower sales projections” through the long term, according to quarterly re- ports. Progresso was reportedly for sale in 2021 alongside Hamburger Helper, though no deal emerged. (Hamburger Helper sold in 2022 for US$610 mil- lion.) It’s possible Progresso is still for sale, but in the meantime the brand is taking advantage of flu season to sell “that feeling of a hug in a bowl” in a hard candy. “The goal? To remind you of the comfort you can find in a tradition- al bowl of Progresso,” General Mills said in a statement. “So enjoy soup drops while they’re available for National Soup Month, but grab the real thing whenever you want the warm coziness of a bowl of soup.” — Minnesota Star Tribune BROOKS JOHNSON SUPPLIED General Mills-owned Progresso recently released soup-flavoured hard candies. ;