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Macy's is facing pressure from two activist investors to make a number of changes to the department store chain.
Activist investors Barrington Capital Group and So Equities took issue with Macy's capital allocation strategy in a presentation Monday, at the same time that the department store chain is considering some “structural changes” to its properties and two more luxury brands. He argued that measures should be considered.
“We are excited to partner with Macy, who can bring new perspectives to our company, particularly in the areas of capital allocation, merchandising and retail, and real estate,” Barrington's James Mitarotonda and Thor's Joseph Sitt said in a press release. We aim to become a value-added shareholder in the company.”
(Bridget Bennett/Bloomberg via Getty Images/File)
Mitarotonda and Sitt believe that Macy's operational improvements, combined with our recommendations for aggressive share buybacks and business structure changes, will result in a 150% to 200% total return to Macy's stockholders over the next three years. “We believe there is potential for returns.”
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Macy's stock has fallen more than 18% in the past 12 months.
The companies expressed optimism about Macy's previously announced “Bold New Chapter” initiative to close 150 unproductive Macy's stores by the end of 2026, while the department store chain said it would reduce all capital spending. He argued that it should be reduced to 1.5-2% of sales.
The “Bold New Chapter” initiative launched by Macy's includes investments in the Macy's stores it maintains, as well as opening and “simplifying” more Bloomingdale's and Bluemercury stores. are.[ing] and modernize[ing] End-to-end operations. ”
| ticker | safety | last | change | change % |
|---|---|---|---|---|
| M | Macy's Inc. | 16.16 | +0.18 |
+1.16% |
One of the “structural actions” proposed by Mr. Barrington and Mr. Soh is to create an “independent real estate subsidiary to collect market rents from Macy's retail operations and pursue other asset sales and redevelopment opportunities.” Sitt said it was to establish the company. Activist investors estimate the department store chain's real estate assets are worth between $5 billion and $9 billion.
In addition, Macy's should consider “strategic alternatives” to its Bloomingdale's and Bluemercury brands, the companies said, noting their “higher growth.”
Macy's to close 150 stores by 2026, open new Bloomingdale's and Bluemercury stores
Macy's operates approximately 60 Bloomingdale's brand stores and 164 Bluemercury brand stores.
Another thing Barrington and So said Macy's should pursue was $2 billion to $3 billion in stock buybacks over the next three years.
The department store chain said Monday that the company is “committed to achieving sustainable, profitable growth and increasing shareholder value,” adding that it “regularly reviews the company's strategy and capital allocation framework and “We have always been open to exploring all avenues to strengthen our team.” value. “
Macy's added that the company's “Bold New Chapter” initiative “continues to gain momentum across all three pillars.”
(Gary Hershawn/Getty Images/File)
“We will continue to act in the best interests of our company and all of Macy's stockholders, and we will continue to work with our stockholders, including Barrington and Thor, to further our efforts and meet our long-term goals. I look forward to implementing it.”
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Mr. Barrington and Mr. So want to have a presence on Macy's board of directors, according to a press release.
The Macy's Board of Directors currently includes Emily Arrell, Torrence Boone, Marie Chandoha, Naveen Chopra, Richard Clarke, Deirdre Connelly, Jill Granoff, Sarah Levinson, Richard Markey, Douglas Sessel, and Tony. The group consists of 13 members: Spring, Paul Varga, and Tracy Jen.
