Dec 9, 2024, 12:00 AM
Dec 9, 2024, 12:00 AM

Macy's struggles again as activists demand dramatic changes

Highlights
  • Barington Capital announced its position in Macy's and outlined plans for company restructuring.
  • Macy's reported a 2.4% decline in sales in its most recent quarter.
  • The retailer faces ongoing challenges in a competitive market as it closes stores and restructures its operations.
Story

In the U.S., Macy's is facing its fourth activist push in a decade as Barington Capital has announced its position in the retail giant and outlined demands for significant changes. The activist investor is advocating for a reduction in company spending, a thorough evaluation of Macy's real estate assets, and a possible sale of its luxury brands. Despite this pressure, Macy's stocks saw a modest increase of about 3% following the announcement. Macy's management stated its commitment to engaging with investors while continuing plans to close approximately 150 namesake stores, which equates to nearly one-third of its locations, by early 2027. The company's overall sales performance indicated a decline of 2.4% in the most recent quarter, amounting to $4.74 billion, with comparable sales dropping by 1.3%. Barington's presentation underscores concerns that, while the company generates cash, it has allocated almost $10 billion towards capital expenditures, seemingly neglecting shareholder returns such as buybacks or dividends. The activist's partnership with Thor Equities, a private equity firm focused on retail investment, adds urgency to their campaign as they seek to reshape Macy's strategic direction. The retailer's struggles have led to declining sales in its namesake stores, particularly as many mall locations continue to close amidst a shifting retail landscape. Future engagement with shareholders is expected as the retailer prepares to share a comprehensive financial outlook and performance results by December 11. Furthermore, selling parts of Macy's extensive real estate portfolio could be a strategic move, enabling the company to channel vital resources into its more lucrative segments, including Bloomingdale's and Bluemercury. As the retail environment continues to evolve, Macy's stands at a pivotal moment, navigating external pressures while attempting to revitalize its brand and business operations.

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