Retail shake-up: Century 21 files for bankruptcy, J.C. Penney's potential buyer

Mall owners Simon Property Group and Brookfield Property Partners are close to striking a deal to buy J.C. Penney out of bankruptcy. Meanwhile department store Century 21 filed for bankruptcy. Yahoo Finance’s On The Move panel share the details.

Video Transcript

ADAM SHAPIRO: And welcome back to On the Move. As we watch markets right now, J.C. Penney stock, it's trading down at this point. But there is a deal in the works to help them avoid bankruptcy. Let's bring in Brian Sozzi with more on this deal. And there's even more to talk about. Because we're watching another retailer very popular here in the tristate area, and as well as Pennsylvania, Century 21 going out of business. Start with JCP, though.

BRIAN SOZZI: Yeah, Adam, Simon Property propping up another dead corpse in J.C. Penney. It is amazing to see Brookfield and Simon Property, which are essentially bailing out one of their tenants in J.C. Penney, valuing J.C. Penney at $1.75 billion. That definitely borders on a joke. What will amount here is that 650 stores will be saved across the country.

And we talked to our retail analyst earlier in the hour here on my show. She says, really, don't expect any growth from J.C. Penney. And she's right. They're not going to go out there and open stores. I think all this deal does is prop up this dying carcass, ultimately for Simon Property and Brookfield to think about what goes in those 650 stores when J.C. Penney doesn't survive.

JULIE HYMAN: Well, here's the question though, Brian, because it's not just J.C. Penney, of course. As we mentioned, bail out Brooks Brothers, as well, it bought Brooks Brothers, right? And we're seeing some interesting partnerships here between some of the mall owners and some of these legacy retailers that are having trouble. So the question is, what can they do differently, if anything? There are retailers that are doing well right now, right? So are there changes? Is it even possible to make changes to help J.C. Penney, or a Brooks Brothers, or some of the other retailers that have not done as well?

BRIAN SOZZI: Brooks Brothers, sure. You just go in there and refresh the stores. Because they still look absolutely dismal. And they look the same as they did 15 years ago. So that's something you could-- perhaps refurbish, close down half the stores, and make that model work. J.C. Penney's model's completely dead. You saw Ron Johnson when he was CEO of J.C. Penney try to reinvent the store model. The stock absolutely crashed. They're still paying off a lot of debt from that, even after this bankruptcy.

J.C. Penney, ultimately, those stores will be filled by Amazon fulfillment centers. That's just the bottom line here.

- And Brian, of course, we have to bring up, as Adam mentioned, Century 21, a store they are a lot of us here in the city are very familiar with. And I noticed they have 13 stores that are going to be shutting down their business. What else really happened there?

BRIAN SOZZI: Tourism. And the read through here, Julia, is Century 21 has feasted on tourism to New York City primarily. The tourists come to the city with lots of their digital cash. And they blow thousands and thousands of dollars on discounted designer pants, shoes, handbags, you name it, even jewelry.

But now, that model is also not working. And the read-through here is for Tiffany-- I just heard a story about this on Yahoo Finance-- what happens? If tourists are not coming to the city in these giant, hulking department stores, or flagship stores, what are you going to do? And if you're Tiffany, you're in big trouble here. And I think a year from now, you can very easily see the stock much lower than it is today as a public company.