Activist investors urge Macy's to create a real estate unit among other
changes to boost stock
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[December 10, 2024] By
ANNE D'INNOCENZIO
NEW YORK (AP) — Activist investor Barington Capital Group is calling on
department store retailer Macy's to develop an internal real estate
subsidiary, reduce capital expenditures, and explore strategic options
for its Bloomingdale's and Bluemercury chains among other changes to
boost its slumping stock, according to its proposal made public Monday.
The presentation to Macy's shareholders comes after Barington Capital,
which has stakes in such brands as Victoria's Secret, Hanes and
Dillard's, has built an undisclosed stake in Macy's. Barington said it
has partnered with property owner Thor Equities. They said that Macy's
shares are undervalued, and its real estate, including its Macy's
flagship at Herald Square, is worth between $5 billion and $9 billion.
They believe Macy's should create a separate real estate unit to collect
market rents from Macy’s retail operations and pursue other asset sale
and redevelopment opportunities.
Macy’s shares fell 4% in morning trading, and they have fallen 12% so
far this year and closed on Friday at $16.43. The company is expected to
report its fiscal third quarter earnings Wednesday after it announced it
is delaying its full quarterly results after it discovered an employee
intentionally hid up to $154 million of expenses over several years.

As part of the proposals, Barington and Thor are urging Macy's to cut
capital expenditures to between 1.5%to 2% of total sales from the
current 4% and repurchase at least $2 billion to $3 billion in stock
over the next three years.
Such changes could lead to a 150% to 200% total return for Macy’s
stockholders over the next three years, they said.
“We seek to be value-added stockholders at Macy’s that can bring fresh
perspectives to the company, especially in the areas of capital
allocation, merchandising and retail, and real estate," said Joseph Sitt,
chairman of Thor, and James Mitarotonda, chairman of Barington, in a
joint statement.
Barington said in the presentation that Macy's should look at publicly
traded Dillard's as an example of how to prudently cut expenses and
deliver strong returns to shareholders. Dillard's shares are up 10%
since the beginning of the year.
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Black Friday shoppers at the Walden Galleria's Macy's in Buffalo,
NY., Friday, Nov. 29, 2024. (AP Photo/Gene J. Puskar)
 Macy’s has had to confront other
activist shareholders looking to make changes as the company
struggles with sluggish sales and increased competition from
discounters and online behemoth Amazon.
In July, it cut off monthslong buyout talks with two investment
firms, saying the bid was inadequate and the financing was not
certain. Macy’s said those bidders, Arkhouse Management and Brigade
Capital Management, failed to provide it with additional information
by its June 25 deadline, including the highest price they would be
willing to pay. In April, Macy’s named two independent directors to
its board backed by Arkhouse, ending a fight to replace most of the
board and to acquire the chain.
Macy's CEO Tony Spring took the helm Feb. 4 and then later that
month he announced a plan to close 150 stores. It also announced
plans to upgrade 350 stores, with plans to add more salespeople to
fitting areas and shoe departments, while adding more visual
displays like mannequins.
The Macy’s stores targeted for closure accounted for 25% of overall
square footage but less than 10% of its sales, the company had said.
In a statement, Macy's said that its board and management team are
committed to “delivering sustainable, profitable growth and driving
shareholder value.”
“We have 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," the
company said Monday.
It said it remained confident in its new strategy to cut stores and
to upgrade others and expects to share full details of its progress
on Wednesday. It also said it looks forward to engaging with its
shareholders including Barington and Thor, as it further advances
its initiatives and execute toward its long-term goals.
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