Barington Capital and Thor Equities are urging Macy’s to unlock the potential of its real estate holdings by creating a separate real estate investment trust (REIT) and exploring strategic options for its Bloomingdale’s and Bluemercury brands. The activist investor group, which recently acquired a stake in the department store giant, contends that Macy’s board lacks the necessary expertise to maximize the value of its real estate assets, estimated to be worth between $5 billion and $9 billion.
The investor group’s proposal also includes significant cost-cutting measures, such as reducing capital expenditure by approximately 50%. Additionally, they are seeking board representation to influence the company’s strategic direction. Barington and Thor argue that Macy’s valuation has suffered over the past decade due to prior management missteps and broader challenges within the department store industry.
This call for change comes as Bloomingdale’s and Bluemercury, Macy’s higher-end retail chains, demonstrate robust sales performance compared to the company’s namesake stores. The activist investors express confidence in CEO Tony Spring’s turnaround plan, implemented after he assumed leadership in February. Spring’s strategy involves closing around 150 underperforming Macy’s stores by 2026 while simultaneously expanding the Bloomingdale’s and Bluemercury brands with 15 and 30 new locations, respectively. This initiative aims to generate $100 million in cost savings this year.
Macy’s has responded to the activist investors’ proposals by stating its receptiveness to strategic reviews and its willingness to engage with Barington and Thor. The company’s third-quarter earnings report, initially delayed due to an internal accounting issue involving concealed expenses, is expected this week. Following the news of the activist investor pressure, Macy’s shares saw a 3% increase in premarket trading.
Beyond the real estate strategy, the investor group also recommended an aggressive stock buyback program, urging Macy’s to repurchase up to $3 billion worth of its shares over the next three years. This proposal follows the collapse of earlier discussions regarding a potential take-private bid from an investor group led by Arkhouse Management and Brigade Capital Management.
Macy’s stock has experienced an 18% decline this year, with a market capitalization of approximately $4.6 billion as of last Friday’s closing bell. The Wall Street Journal initially reported Barington Capital’s stake in Macy’s earlier on Monday.
