{"id":54556,"date":"2023-12-12T17:55:31","date_gmt":"2023-12-12T17:55:31","guid":{"rendered":"https:\/\/prosfunds.com\/business\/how-macys-became-a-takeover-target\/"},"modified":"2023-12-12T17:55:32","modified_gmt":"2023-12-12T17:55:32","slug":"how-macys-became-a-takeover-target","status":"publish","type":"post","link":"https:\/\/prosfunds.com\/?p=54556","title":{"rendered":"How Macy\u2019s became a takeover target"},"content":{"rendered":"
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\n Macy\u2019s has struggled for years against rising competition and shoppers migrating away from department stores. Now, a group of investors reportedly wants to take Macy\u2019s private at a vulnerable moment for the famed company.\n <\/p>\n

\n Arkhouse Management, a real estate investment firm, and Brigade Capital Management, a global asset manager, submitted a bid to buy Macy\u2019s for $21 a share, valuing Macy\u2019s at $5.8 billion, the Wall Street Journal reported. The deal would pay shareholders a 32% premium above Macy\u2019s closing price Friday.\n <\/p>\n

\n The takeover bid is a sign that investors believe Macy\u2019s is undervalued on the public market. Retail analysts say Macy\u2019s valuable real estate, including its flagship store in New York City, is a coveted asset to the investors.\n <\/p>\n

\n \u201cYears of chronic underperformance has put downward pressure on Macy\u2019s share price and means that the iconic department store chain is now a relatively attractive prospect,\u201d Neil Saunders, an analyst at GlobalData Retail, said in a note to clients.\n <\/p>\n

\n It isn\u2019t clear how Macy\u2019s executives and board members view the proposal. Spokespeople for Macy\u2019s and Arkhouse declined to comment to CNN on the proposal. Brigade did not respond to CNN\u2019s request for comment.\n <\/p>\n

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\n <\/source><\/source><\/source><\/source><\/picture>\n <\/div>\n<\/div>\n

\n Macy\u2019s was synonymous with the department store model for decades and consumers visiting Macy\u2019s stores to shop for clothing, perfume and other products. The modern Macy\u2019s was created in 2005 after a merger between Federated and May.\n <\/p>\n

\n But Macy\u2019s has been slow to adapt to online shopping, overhaul its stores and adjust to shoppers\u2019 changing preferences. Macy\u2019s has attempted numerous strategies in recent years to revitalize business, such as new brands and smaller stores, but the moves have done little to alter its long-term trajectory. Macy\u2019s stock price has dropped 75% from a peak of $73 a share in 2015. Since then, it has closed nearly 300 stores \u2014 one third of its stores \u2014 and lost $3 billion in annual sales.\n <\/p>\n

\n Macy\u2019s fortunes have declined alongside the department store industry.\n <\/p>\n

\n Since 2000, retail sales at department stores have dropped by half, according to the Census Bureau. The dropoff has tipped some department stores such as Sears, Neiman Marcus, JCPenney, Lord & Taylor and others into bankruptcy.\n <\/p>\n

\n \u201cThe whole concept of department stores has been under tremendous pressure,\u201d said Venkatesh Shankar, a professor of marketing and e-commerce at Texas A&M University\u2019s Mays Business School. \u201cAny retailer that thrived under the old department store concept is struggling to grow.\u201d\n <\/p>\n

\n Competition and mall struggles
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\n Amazon has cut into Macy\u2019s sales in recent years, but Amazon is just one reason why Macy\u2019s has struggled. Macy\u2019s is stuck in the middle, squeezed by luxury retailers at the high end of retail and discount stores offering lower prices on the other end.\n <\/p>\n

\n Over the past decade, direct-to-consumer online fashion brands have grown, aided by Instagram and TikTok. Big-box stores such as Target, Walmart and Costco have expanded. Fast-fashion giants like H&M, Uniqlo and, more recently, Shein and Temu have taken aim at Macy\u2019s. And discount clothing stores like TJ Maxx and Burlington have become larger competitors.\n <\/p>\n

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\n \"Shoppers<\/source><\/source><\/source><\/source><\/picture>\n <\/div>\n<\/div>\n

\n Macy\u2019s has also been hurt by its large presence in regional malls.\n <\/p>\n

\n Macy\u2019s for decades was a reliable anchor tenant for mall owners and a draw for shoppers, but lower and mid-tier regional malls are struggling to compete against the growth of online shopping and discount chains. As consumers stopped going to these malls as frequently and neighboring stores closed inside malls, Macy\u2019s suffered.\n <\/p>\n

\n \u201cAll these trends are making it harder for legacy department stores to thrive,\u201d Shankar said.\n <\/p>\n

\n Some analysts say the investor group\u2019s offer is too low for Macy\u2019s.\n <\/p>\n

\n In 2015, activist investor Starboard said Macy\u2019s properties were worth $21 billion, including $4 billion alone for its flagship Herald Square store in New York City, In 2017, Hudson\u2019s Bay, the owner of Saks, said Macy\u2019s could be worth $14 billion.\n <\/p>\n

\n If a deal does go through, however, it could mean trouble for Macy\u2019s retail business.\n <\/p>\n

\n Investor groups such as private equity funds and hedge funds have been active in recent decades in buying struggling or under-performing retailers, with the stated goal of taking them private, improving their operations and selling them for a profit.\n <\/p>\n

\n \u201cAn investor group that sells off real estate and perhaps takes other actions such as spinning off the ecommerce business would certainly make some short-term gains,\u201d Saunders said. \u201cBut unless some of those profits were reinvested in revitalizing the core retail business, it would leave Macy\u2019s in the worst of all worlds.\u201d\n <\/p>\n

\n The results have often led to bankruptcies for many well-known companies, such as Lord & Taylor, Toys R Us, Payless, Sears and others.\n <\/p>\n<\/p><\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Macy\u2019s has struggled for years against rising competition and shoppers migrating away from department stores. Now, a group of investors reportedly wants to take Macy\u2019s private at a vulnerable moment for the famed company. Arkhouse Management, a real estate investment firm, and Brigade Capital Management, a global asset manager, submitted a bid to buy Macy\u2019s […]<\/p>\n","protected":false},"author":1,"featured_media":54557,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[23],"tags":[],"class_list":{"0":"post-54556","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business"},"yoast_head":"\nHow Macy\u2019s became a takeover target | Prosfunds<\/title>\n<meta name=\"description\" content=\"Macy\u2019s has struggled for years against rising competition and shoppers migrating away from department stores. 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