Another Activist Takes Aim at Macy’s, Seeks Spending Cuts and Real Estate Restructuring
Activist investor Barington Capital revealed Monday it has a position in Macy's and wants the company to cut spending, explore selling its luxury brands, and take a hard look at its real estate portfolio. It marks the fourth activist push at the struggling department store in the last decade. The activist has partnered with private equity firm Thor Equities in its push, according to a Barington presentation. The two investors did not disclose the size of its stake.
Barington wants Macy’s to beef up its share buybacks and consider selling off its Bluemercury and Bloomingdale’s brands. Like other activists that have preceded it, Barington also believes that Macy’s should take a fresh look at its real estate portfolio.
Total Retail's Take: This is the most recent occurrence of an activist investor pushing its agenda on the department store chain. As sales at Macy's namesake stores decline and it continues to close many of its mall anchors, investors in the company are seeking drastic changes that will lead to a transformation of the iconic retail business. That future would include less spending — Barington alleged that Macy's management has chosen to spend nearly $10 billion on capital expenditures while neglecting buybacks or dividends — a slimmed down brand portfolio with the potential sale of Bluemercury and Bloomingdale's to infuse much needed capital into the organization, and the creation of a separate subsidiary to optimize real estate assets. The subsidiary could charge rent to Macy’s parent company while the subsidiary’s management assessed how to maximize value from those physical assets. Macy’s owns many of its mall-anchor stores.
What's clear is that Macy's existing management team as well as its investors recognize the need to evolve the business for a new retail landscape, one that includes the emergence of online shopping as well as brands bypassing retail partners and selling their products direct to consumers.
