People walk past Macy’s Herald Square flagship store on November 29, 2024 in New York City.
David Dee Delgado | David Dee DelgadoGetty Images
Activist investor Barington Capital revealed on Monday that it holds macy’s department store And it wants the company to cut spending, weigh the sale of its luxury brands and take a hard look at its real estate portfolio.
It’s the fourth push by activists against the struggling department store in the past decade.
After the news broke, Macy’s shares rose about 3% in pre-market trading. According to Barrington, the activist has partnered with private equity firm Thor Equities to promote the initiative. The dissidents did not disclose the size of their holdings.
The activist believes Macy’s can further cut inventory, sales and administrative costs. Barington said in the presentation that while the business continued to generate cash, management chose to spend nearly $10 billion on capital expenditures and ignored buybacks or dividends.
Macy’s stock has underperformed the S&P 500 and Retail Select Index over the past decade. Barrington pointed to smaller department store operator Dillard’s, which also tilts toward management, as an example of efficient capital allocation. Dillard’s has a market capitalization of more than $7 billion and says it operates 273 stores in the United States
“We remain confident in our bold new chapter strategy,” Macy’s said in a statement. “We look forward to working with our shareholders, including Barrington and Tolle.”
Barrington hopes Macy’s will increase its buyback efforts and evaluate whether it should sell its better-performing Bluemercury and Bloomingdale’s brands.
Like other activists before him, Barrington believes Macy’s should revisit its real estate portfolio. Barrington valued it at between $5 billion and $9 billion, echoing analysis from other activist investors. Barrington said Macy’s should create a separate subsidiary that could collect rent from Macy’s parent company while the subsidiary’s management evaluates how to maximize value from the assets.
Macy’s is once again being targeted by activists as sales at its namesake stores decline and many mall anchor stores continue to close.
Department store operators announced in February that they would close About 150 (or nearly one-third) stores with the same name By early 2027.
Macy’s said sales fell 2.4% to $4.74 billion in the most recent quarter ended Nov. 2. Comparable sales across its owned and licensed businesses and online markets fell 1.3%.
Macy’s delayed reporting full results for the quarter as it faces scrutiny for another reason. The company said it was investigating the matter One employee was found to have deliberately hidden up to $154 million Delivery charges have not shown on its accounting books for nearly three years. The company said it plans to share full results and outlook by Dec. 11.
Selling real estate while Macy’s stores close could free up cash for the business. Macy’s, which owns many mall anchor stores, has not disclosed which locations it has sold. In late November, the company said proceeds from asset sales in the latest quarter totaled $66 million, above its expectations.
In recent quarters, Macy’s has begun reporting sales at stores that will remain open after the latest round of closures of namesake locations. This has eliminated some struggling mall stores. Macy’s, which will remain open after the beginning of 2027, saw comparable sales (including third-party markets) of its own and licensed stores decline 0.9%.
Barrington has worked on campaigns for other large consumer brands, including toymaker Mattel, The Children’s Place, Hanes and Steve Madden. Thor Equities, a retail-focused private equity firm, was part of the buyout group that acquired Hurley a few years ago.
Correction: A previous version of this article incorrectly named the private equity firm Barington Capital works with. This is Thor stock.
