Investor urges Macy's to consider options for two of its chains

Bengaluru — Barington Capital is urging Macy’s to create a real-estate unit and consider options for its Bloomingdale’s and Bluemercury chains after building an undisclosed stake, the activist investor said on Monday.

The investor has teamed up with property owner Thor Equities and together they believe Macy’s shares are undervalued and its real estate was worth between $5bn and $9bn.

Shares of Macy’s, which is set to report its third-quarter results this week, rose 3% in premarket trading. Last month, the company had delayed its results and disclosed that an employee hid as much as $154m in expenses over years.

Macy’s did not respond to a request for comment.

The activist investor was also asking Macy’s to cut its capital expenditure to between 1.5% and 2% of total sales and repurchase up to $3bn worth of stock over the next three years.

Earlier this year, Macy’s had to contend with an extended take-private bid from another investor group comprising Arkhouse Management and Brigade Capital Management, as it struggles with weak demand at its department store outlets.

The company ended talks with the investor group, saying the $6.9bn offer failed to “provide compelling value”.

Macy’s has posted a fall in revenue for nine straight quarters. Analysts expect a 1.7% drop in third-quarter revenue when it reports results before December 11 amid a crucial holiday shopping period.

Macy’s stock has lost about 18% of their value this year, lagging a 33.6% rise in the S&P 500 Consumer Discretionary sector index.

The company had a market capitalisation of about $4.6bn as of Friday’s closing price of $16.43 per share. 

Reuters