Macy’s Faces Pressure From Activist Investor To Pivot Away From Current Strategy

Macy’s is once again making headlines to close out 2024 — this time due to pressure it’s facing from an activist investor.

Barington Capital partnered with property owner Thor Equities to deliver a presentation on a range of subjects it believes could benefit the retailer, according to The Wall Street Journal. Among these is the creation of a real estate unit, a reconsideration of certain real estate holdings in order to bolster cash supply, and the potential divestment of two high-growth chains, Bloomingdale’s and Bluemercury, as Axios outlined.

Barington Capital and Thor Equity To Share Presentation Concerning Macy’s Trajectory

Barington indicated it would be sharing its presentation to the public via its website late on Dec. 9, per the WSJ.

In the presentation, Barington suggested that Macy’s has been on something of a misguided trajectory, overextending itself in terms of capital expenditures (to the tune of $10 billion, per CNBC) while failing to pay proper attention to dividends and buybacks. As the WSJ reported, Barington is requesting that Macy’s trim capital expenditures to between 1.5% and 2% of total sales, down from a current level of 4%. Barington also would prefer the company buy back at least $2 billion to $3 billion of stock during the next three years.

By doing the above, Barington indicated, the company could see share price soar by as much as 200% over the same time frame.

Barington also called for the sale of outperforming brands Bluemercury and Bloomingdale’s, as “the investors see those as luxury brands that would trade at a higher multiple on their own,” per the WSJ.

Macy’s itself appeared stoic in the face of pressure coming from Barington and Thor, reinforcing its commitment to closing underperforming stores and reinvesting heavily in those locations which are perceived to be more profitable.

“We remain confident in our Bold New Chapter strategy,” the retailer said in a Dec. 9 statement. “We look forward to engaging with our shareholders, including Barington and Thor.”

Second Time in 2024 That Macy’s Has Faced Pressure From Activist Investors

As Axios underscored, this isn’t the first time Macy’s has faced pressure from activist investors in 2024.

In July, the retailer announced it was ending talks with Arkhouse Management and Brigade Capital Management after months of intense negotiations. The two activist investors had pushed to acquire Macy’s for roughly $6.9 billion, per Axios, although the deal fell through when Macy’s expressed disinterest in the offer.

According to AP News — quoting Neil Saunders, RetailWire BrainTrust member and managing director of research firm GlobalData Retail — the deal did not represent a value proposition on either side of the bargaining table.

“Other than seeking to monetize Macy’s real estate assets for short term gain, neither party brought any long-term value to the table,” Saunders said at the time. “Indeed, many of the activist investor proposals would have significantly weakened Macy’s and hampered its ability to survive as a retail operation.”