Activist investor Barington Capital Group, in partnership with property owner Thor Equities, has called on Macy’s to undertake significant changes to boost its struggling stock value. The proposals include forming a real estate subsidiary, reducing capital expenditures, and exploring strategic options for its Bloomingdale’s and Bluemercury chains. Barington believes these changes could unlock significant shareholder value and address Macy’s underperforming stock, which has dropped 12% year-to-date.
The activist group estimates Macy’s real estate assets, including the flagship Herald Square location, are valued between $5 billion and $9 billion. By creating a separate real estate entity, Macy’s could collect market rents and explore asset sale or redevelopment opportunities.
Barington and Thor also recommend cutting capital expenditures to 1.5%-2% of total sales, down from the current 4%, and initiating a stock buyback program worth $2 billion to $3 billion over three years. They project these measures could result in a 150%-200% total return for shareholders over the next three years.
The push comes amidst Macy’s broader challenges, including competition from online retailers like Amazon, declining sales, and operational setbacks. The company recently announced it would delay its third-quarter earnings report due to the discovery of $154 million in misreported expenses by an employee.
Barington pointed to Dillard’s as a model for prudent expense management and shareholder returns, with Dillard’s shares up 10% this year. Macy’s, meanwhile, has faced activist pressure in the past, including failed buyout talks and board reshuffles earlier this year.
Macy’s CEO Tony Spring, who took over in February, has focused on restructuring efforts, including closing 150 underperforming stores while upgrading 350 locations. The company stated its commitment to driving sustainable growth and engaging with shareholders to enhance long-term value.
Macy’s is expected to outline its progress and strategy during its upcoming earnings report.
