Authentic Brands Group Chief Executive Jamie Salter.
Source: Authentic Brands Group
The company that has purchased retailers such as Aeropostale, Barneys New York and Forever 21 out of bankruptcy is looking for buying opportunities during the coronavirus pandemic.
“My strategy is simple. Buy low, sell high,” Authentic Brands Group Chief Executive Jamie Salter told CNBC in a phone interview.
“We make sure, if we get into retail, that [the company] has a purpose,” he said. “If it doesn’t have a purpose, we find a purpose.”
The pandemic, which forced thousands of retailers’ stores and malls shut toward the end of March, has strained many businesses’ liquidity and already pushed some over the brink and into bankruptcy. Department store chains Neiman Marcus, J.C. Penney and Stage Stores have each filed Chapter 11 during the crisis. So did apparel maker J.Crew, along with the home goods chain Tuesday Morning. Pier 1 Imports, which had filed for Chapter 11 bankruptcy protection before the coronavirus being declared a pandemic, could not find a buyer during the crisis and has been forced to liquidate.
Now, many of these of companies are looking for a new owner for bits and pieces — or in some instances all — of their businesses.
That buyer could end up being ABG. It has been for a number of other struggling names. ABG also currently manages the apparel brand Nautica, sportswear maker Juicy Couture and shoe company Nine West, among others.
“I think there is a place for J.C. Penney,” Salter said, citing one example of a bankrupted company he views worth saving. “They have been floundering. They haven’t really found their spot. … But I think there is a play for J.C. Penney. I think J.C. Penney needs a purpose. And I have my ideas on what it should be.”
He declined to comment on whether he has held talks with Penney. Private equity firm Sycamore has been considering buying Penney outright or taking a stake in the department store, according to Reuters. That report suggested a variety of potential transactions are being considered.
Penney has until July 15 to receive the funding it needs and to meet the milestones required of it by its bankruptcy lenders, CNBC previously reported. Otherwise, it will head toward a potential sale.
Meantime, men’s apparel maker Brooks Brothers is talking to banks about raising financing for a potential bankruptcy that could come as soon as July, people familiar with the matter have told CNBC.
“Brooks Brothers is a global brand,” Salter commented. “I am looking at it from a global standpoint. Certain brands travel, and certain brands don’t travel.”
He also said J.Crew, known for its preppy looks, is a brand that is well recognized globally.
It’s possible ABG could do more deals with megamall owners such as Simon Property Group and Brookfield, given their track record. The three came together to acquire Forever 21 out of bankruptcy. And they all have ownership of the teen apparel company Aeropostale.
Brookfield in early May said it was launching a retail revitalization program to focus on taking noncontrolling stakes in retailers to assist them with their capital needs. It said it was targeting spending $5 billion on the plan.
“We are partners with our landlords,” ABG’s Salter said.
Meantime, as shopping malls reopen across the U.S. and local lockdown restrictions are easing, Salter said he has been impressed with the bounce back among consumers.
“The malls are busy,” he said. “People are going with a purpose. Average transactions are way up, and the numbers are increasingly getting better.”
“Apparel will be back,” he added. “People are not necessarily buying less apparel, they are buying different apparel. My guess is Lululemon sales are through the roof right now.”