activist investor pushes for changes at struggling macys amid declining sales

Macy's, a well-known department store chain, is once again being targeted by activist investors. Barington Capital has revealed its stake in the company and has made recommendations to revitalize the struggling retailer.

Activist Intervention

Barington Capital has intervened in Macy's operations for the fourth time in the past decade, highlighting ongoing concerns about the company's performance and strategic direction. Macy's shares saw a modest increase of approximately 3% in premarket trading following the announcement.

Recommendations for Revitalization

Barington Capital emphasized the need for Macy's to streamline its operations by reducing inventory and cutting sales and administrative expenses. The firm also pointed out that Macy's has allocated nearly $10 billion to capital expenditures, neglecting shareholder returns through buybacks or dividends.

Macy's has responded to the activist push by reiterating its commitment to its "Bold New Chapter" strategy, which includes closing underperforming stores and investing in its more profitable locations. The company plans to close approximately 150 of its namesake stores by early 2027 and focus on enhancing the remaining 350 stores and bolstering its higher-end brands.

Real Estate Evaluation

Barington Capital's recommendations also include a thorough review of Macy's real estate portfolio, which the firm values between $5 billion and $9 billion. The activist investor suggests that Macy's create a separate subsidiary to manage its real estate assets, allowing for a more strategic assessment of how to maximize value from these properties.

Financial Performance and Challenges

Macy's financial performance has been under scrutiny, particularly following a recent quarter where the company reported a decline in sales. Comparable sales across its owned and licensed businesses, as well as its online marketplace, also fell. Macy's has postponed the release of its full quarterly results due to an internal investigation into accounting irregularities. The company plans to disclose its complete financial results and outlook by December 11.

Adapting to Changing Retail Landscape

Macy's struggles are reflective of broader trends within the retail sector, where traditional department stores face mounting pressure from e-commerce and changing consumer preferences. The involvement of activist investors like Barington Capital underscores the urgency for strategic realignment. Macy's ability to adapt will be crucial in determining its future viability.

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