Macy's is under pressure from investors to "[c]reate a separate internal real estate subsidiary to optimize asset optionality."
Amid declining sales and financial struggles, Barington Capital Group and Thor Equities have recommended Macy's make changes.
The investor groups, which hold stakes of undisclosed value in the 194-year-old retailer, estimate that Macy's real estate portfolio is valued at $5 billion-$9 billion.
According to the Financial Times, they have called on the company's board to create a separate subsidiary to collect rent from Macy's retail operations and sell or redevelop some of its properties.
The investors have also reportedly asked Macy's to scale back capital spending, buy back more stock, explore selling its Bloomingdale's and Bluemercury banners, and put representatives of Barington and Thor on the company's board.
"We invested in Macy's because we believe the shares are mispriced relative to the upside potential we see in management's new strategic plan and the compelling value of the company's owned real estate assets," James Mitarotonda, Barington's chair, told the Times. "However, we are concerned with Macy's large capital expenditure programs."
In February, the company hired Tony Spring as its new chief executive. Since then, he has launched a turn-around plan that includes closing 150 underperforming Macy's stores, investing in 350 others, expanding the reach of Bloomingdale's and Bluemercury stores and fast-tracking efficiency measures.
Faced with intense competition from big-box stores and online shopping, Macy's sales reportedly fell 2.4% in the quarter ending in November. The retailer has also substantially lowered its expected earnings for 2024, according to the Daily Mail.
"Macy's' outlook is very mixed," retail expert Neil Saunders of GlobalData told the Mail. "There is still a big dose of decline in the numbers, but the chain isn't at the bottom of the department store league table — which is positive.
"The numbers are not expected to strengthen significantly over the year ahead as the consumer economy remains pressured and Macy's is in the middle of a turnaround program," he said. "There will certainly be store closures in the year ahead, but most of these have already been planned in.
"Macy's might be struggling to generate growth, but the group is still generating profit and is in the black," he added.
In a statement, Macy's said it has "consistently demonstrated open-mindedness, including with respect to regularly reviewing the company's strategy and capital allocation framework and exploring all paths to enhance value."
Nicole Weatherholtz ✉
Nicole Weatherholtz, a Newsmax general assignment reporter covers news, politics, and culture. She is a National Newspaper Association award-winning journalist.
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