Macy’s Faces Pressure from Investor Group to Sell Itself

Macy’s Faces Pressure from Investor Group to Sell Itself

A group of investors led by Starboard Value LP has made a $5.8 billion offer to buy Macy’s, Inc., the largest department store chain in the U.S., according to a report by The New York Times.

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The offer, which values Macy’s at $36 per share, comes as the retailer struggles to cope with the challenges of the pandemic, changing consumer preferences, and online competition. Macy’s reported a net loss of $3.9 billion for the fiscal year 2023, and announced plans to close five stores and lay off 2,350 corporate employees.

The investor group, which also includes Jana Partners and Hudson’s Bay, believes that Macy’s is undervalued and has significant potential to improve its performance and profitability. The group also wants Macy’s to unlock the value of its real estate assets, which are estimated to be worth more than $10 billion.

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Macy’s has not publicly responded to the offer, but sources familiar with the matter told The New York Times that the company’s board is reviewing it and will decide whether to engage in talks with the investors or reject it.

Macy’s has struggled to win over customers who are increasingly shopping in an e-commerce world. It recorded falling sales for the past few quarters

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Macy’s CEO Tony Spring, who took over from Jeff Gennette in January 2024, said in a statement that he is confident that the strategy will “challenge the status quo and fundamentally transform our business for the future.”

However, some analysts and industry observers are skeptical that Macy’s can revive its fortunes and fend off the takeover bid. They argue that Macy’s faces structural headwinds that are difficult to overcome, such as declining mall traffic, rising costs, and shifting consumer tastes.
“Macy’s is in a tough spot,” said Neil Saunders, managing director of GlobalData Retail.

“It has a loyal but aging customer base, a large but underperforming store portfolio, and a brand that lacks differentiation and excitement. It needs to reinvent itself, but that will take time, money, and vision, which are all in short supply.”


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