Macy’s Activist Investor Pushes for Real Estate Play

An activist investor is reportedly pushing Macy’s to focus more on its real estate.

Barington Capital wants the department store chain to create a separate real estate unit inside the company to help revitalize its flagging stock, The Wall Street Journal reported Monday (Dec. 9).

Barington confirmed it has a stake in Macy’s during a Monday presentation to shareholders, although the size of its stake wasn’t clear, the report said. Joining Barington in its investment is property owner Thor Equities.

The investors said Macy’s shares are undervalued and the company should launch a real estate subsidiary focused on boosting the value of its properties, according to the report. They said Macy’s real estate is worth $5 billion to $9 billion. Even on the low end, that’s more than the market value of the company itself.

In addition, Barington and Thor — which want to add representatives to Macy’s board — are asking the company to consider an alternative approach to its other chains, Bloomingdale’s and Bluemercury, saying these are luxury brands that would trade higher on their own, per the report.

They are also asking Macy’s to reduce capital expenditures to between 1.5% and 2% of total sales — down from around 4% — and buy back at least $2 billion to $3 billion in stock over the next three years, the report said. Altogether, these changes could help boost Macy’s shares by up to 200% over the next three years.

Macy’s stock has dropped over the last decade, per the report. Last week, it was trading at $16.43, down from as much as $70 in 2015 before competition from online retailers began to take effect.

Investors Arkhouse Management and Brigade Capital Management offered to buy the company in 2023, but Macy’s called off talks on the deal in July.

Macy’s announced plans in February to close 150 stores by 2027 and focus on its remaining 350 locations, employing digital communications to keep shoppers coming back when they no longer have their typical brick-and-mortar touchpoints.

“[As far as] digital demand recapture, we have stores in these markets beyond the stores we’re closing — not every market, but most markets,” CEO Tony Spring said at the time. “So, we’ll be looking at neighboring stores to capture that demand, as well as digital outreach to make sure that we lose as little as possible.”