Simon Property Group Buys Yet Another Retailer

Mall operator Simon Property Group (NYSE:SPG) and brand management partner Authentic Brands Group are opening their wallets to buy another retailer, this time outdoor apparel company Eddie Bauer.

Unlike other recent purchases of their SPARC Group joint venture, however, it wasn’t immediately apparent that Eddie Bauer was distressed or bankrupt, as it has been owned for the past 16 years by private equity firm Golden Gate Capital.

Since financial details were not disclosed, it’s not known how much SPARC paid for the retailer. The purchase represents some sector diversity for the JV, but more risk, too.

Two women hiking over mountain peak

Image source: Authentic Brands Group.

Simon Property Group, ABG, and SPARC have cobbled together a portfolio of retail brands that had fallen on hard times, including Brooks Brothers, Lucky Brand, Aeropostale, and Forever 21. A number were bought out of bankruptcy.

The mall operator also partnered with Brookfield Asset Management to buy other distressed retailers, such as department store chain J.C. Penney, and recently launched a special purpose acquisition company, or SPAC, to make retail acquisitions.

Eddie Bauer has a well-known brand, with a 100-year history behind it, and the outdoor recreation market is especially hot these days because of the pandemic. But it is also a lower-tier brand, lost in a crowded space featuring larger, better known and better financed competitors, such as Dick’s Sporting Goods, Eastern Mountain Sports, Patagonia, and REI.

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With ABG’s own brand development portfolio spanning entertainment, media, fashion, beauty, home, and hospitality, it has the depth of experience to undertake a revival, and it plans to expand 300-store chain internationally. But the retail space still isn’t healthy, and with a largely forgotten brand, restoring Eddie Bauer’s luster may not be easy.

ABG says it expects the transaction to close by June 1.


This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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