Activist investor Barrington Capital says Macy's needs to reignite its creativity by offering more exciting products in its stores and hosting engaging events to lure younger generations back.
These are among several changes that activist investors say are needed to turn around Macy's, which once established itself as a premier department store but has struggled to keep up with rapid industry changes and competition. These are just two things.
Barrington Capital Group CEO Jim Mitarotonda said he has confidence in the leadership of Macy's executive team, saying there is “no reason” the company cannot improve its business operations. . While Macy's CEO Tony Spring and CFO Adrian Mitchell “understand the retail industry very well,” Mitarotonda told FOX Business, “We need to think differently.” he said.
Macy's stockholders Barrington Capital, Thor Equities LLC, and their respective affiliates have recommended that Macy's capital allocation strategy be changed and that other structural actions be considered to enhance shareholder value. .
Mitarotonda said the company needs to hire “good tradespeople.” Mitarotonda said Spring was not in charge of merchandising when he led Bloomingdale's, so he was able to assemble a highly creative team of people with strong merchandising and fashion skills. It's important.
“If the product is not attractive, they [customers] I'm not going to go to the store, I'm not going to go to the Macy's website. That won't happen. So it's really about the product and creating an exciting event to drive people into the store,” Mitarotonda said.
The company also needs to strengthen its digital marketing strategy, including the use of influencers. Mitarotonda said appealing to younger consumers is important for the company to penetrate the vast array of retail options available to U.S. consumers today.
“Young people are going to TikTok. They're going to Instagram, they're going to threads, they're going to all the other things that older people aren't just drawn to,” he said. “They are [Macy’s] need to think about it. They need to recreate the excitement that existed so long ago. ”
The head of Barrington Capital praised the strong performance of another major department store, Dillard's, noting that the company had successes in both merchandising and operational improvements, leading to a significant increase in profit margins. emphasized.
Macy's stock price has fallen more than 16% over the past year. During the same period, Dillard's stock rose more than 11%.
Mr. Mitarotonda also suggested that Macy's should separate its operating company from its real estate business, meaning that Macy's should form a separate real estate company to own the properties and that its operating business should pay rent to the real estate company.
Mitarotonda said this “will not hurt retail at all.” On the contrary, he said, it “will make them even better.”
Mitarotonda said this would increase transparency and give shareholders and the financial community a clear view of the revenues and expenses of each division of the company. The company also believes that the value of real estate can be maximized by having real estate professionals manage the properties rather than retailers.
The company also proposed spinning off its luxury brands Bloomingdale's and Bluemercury, which continue to have strong store sales.
Mr. Mitarotonda said that if Bloomingdale's and Blue Mercury were to trade independently of Macy's, they would trade at higher multiples than their parent companies.
“It is imperative that boards and management teams consider how to maximize value for the company's owners and shareholders,” he said.
