To contend with the COVID-19 pandemic, Macy’s is considering raising up to $5 billion worth of debt. The retailer will look to bring in $3 billion with inventory as collateral, as well as $1 billion to $2 billion with real estate, CNBC reported, citing unnamed sources.
Macy’s has approximately 775 stores and has ownership of Bloomingdales as well as Bluemercury. It has approximately $25 billion in sales as of January in addition to $3.5 billion in net debt.
The company’s soonest debt to mature is for approximately $530 million in January of next year. The company’s stock has plummeted almost 70 percent year to date, which gives it a $1.6 billion market cap.
A Macy’s representative said, per the outlet, “As we have previously communicated, the coronavirus pandemic continues to take a toll on Macy’s business. While the digital business remains open, we have lost the majority of our sales due to our store closures.” The representative also noted that “the company is also exploring numerous options to strengthen our capital structure.”
All of the retailer’s stores have been shuttered as of mid-March. Earlier in 2020, the department store retailer retained Lazard, the investment bank, to assist in bolstering its balance sheet.
Bankruptcy is not currently a focus for the department store retailer, per the unnamed sources in the report.
In separate news, Macy’s had announced earlier in the month that Paula Price, its executive vice president and chief financial officer, would be leaving the firm as of May 31. The company noted that Price would stay in her current position until then and will remain on the board as an adviser until November. Price has been in her current role since July of 2018. The company noted at the time that an external search was happening for her replacement.
Macy’s had to furlough most of its workers as the coronavirus closed hundreds of stores in the country, per a report in March.