Activists at Barington Capital have teamed up with private equity firm Thor Equities to push for significant changes at struggling department store operator Macy’s. The investors aim to cut capital expenditures, boost share buybacks and reassess the company’s luxury brands and real estate portfolio.
Macy’s shares rose 3% in premarket trading after the announcement. This marks the fourth activist push at the company in the last decade. Activists believe that by trimming back inventory and sales, and administrative costs, Macy’s can improve its performance.
Despite generating cash, management has chosen to spend nearly $10 billion on capital expenditures while neglecting buybacks or dividends. Over the past 10 years, Macy’s shares have underperformed the S&P 500 and Retail Select indexes.
The company plans to close around 150 of its namesake stores by early 2027 and invest in its remaining locations and stronger brands, such as Bloomingdale’s and Bluemercury. Activists are pushing for Macy’s to sell off its luxury brands and real estate portfolio, with Barington valuing the latter at $5 billion to $9 billion.
The push comes after Macy’s recently faced criticism for a scandal involving an employee who hid up to $154 million in delivery expenses on its accounting books. The company is also under pressure to improve sales performance at its remaining stores.
Source: https://www.cnbc.com/2024/12/09/macys-activists-cost-cuts-real-estate.html