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Could Amazon and Mall Giant Simon Take Over Empty JCPenney and Sears Stores?

A new report has suggested that Amazon.com Inc. and Simon Property Group could take over the spaces left by struggling department store chains in the wake of their bankruptcies.

According to a highly cited exclusive from The Wall Street Journal on Sunday, the online retail behemoth and America’s largest mall owner are in talks to turn some of JCPenney’s and Sears’ formerly occupied anchor stores into fulfillment centers. The locations in Simon’s malls, read the article, will effectively become Amazon distribution hubs, housing products from apparel and accessories to books, home goods, electronics and more.

The report also indicated that discussions between Amazon and Simon have been under way for months — beginning even before the coronavirus pandemic swept the United States. It added that there remains a possibility both parties fail to reach an agreement.

As of May, a public filing revealed that Simon’s malls have 63 JCPenney and 11 Sears units. It is unclear how many outposts will be impacted by such a deal.

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If a deal is made, Amazon would be able to speed up its last-mile deliveries from distribution hubs to customers’ doorsteps in more regions. On the other hand, Simon could fill up vacant prime spaces in its shopping centers with a reliable digital-first tenant whose growth has become even more pronounced in coronavirus times.

In a statement to FN, Amazon spokesperson Rachael Lighty said, “Amazon has a policy of not commenting on rumors or speculation,” while a JCPenney spokesperson said the company has “nothing to share.” Sears declined to comment. FN has also reached out to Simon Property Group, which is set to release its Q2 2020 results after market open today.

Over the past few years, Simon has been snapping up retailers like Aéropostale and Forever 21, and most recently making a joint stalking-horse bid for the bankrupt Brooks Brothers, to avoid dark storefronts in its portfolio of malls.

A report in June also indicated that the mall giant along with brand management firm Authentic Brands Group and Brookfield Property Partners were interested in pulling JCPenney out of bankruptcy. The Plano, Texas-based company is currently undergoing reorganization after it filed for Chapter 11 protection in mid-May. According to Kirkland & Ellis attorney Joshua Sussberg, the retailer has moved forward with a going-concern asset sale and has “not seriously entertained” the possibility of a liquidation.

Separately, the once-dominant Sears filed for bankruptcy in mid-October after failing to turn a profit since 2010. As part of chairman and ex-CEO Eddie Lampert’s restructuring plan through his namesake hedge fund, ESL Investments, the chain is able to continue operations at 425 stores and retain the jobs of 45,000 employees.

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