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ctivist investor Barington Capital Group and Thor Equities have taken a financial stake in struggling department store chain Macy's, urging the company to cut spending and consider selling luxury brands. In a presentation on Monday, they proposed that Macy's reduce capital expenditures by 1.5-2% of its total sales, repurchase $2-$3 billion in stock over three years, and evaluate strategic alternatives for its Bloomingdale's and Bluemercury operations.

    Macy's has faced declining sales, with company revenues falling 2% to $4.74 billion in the quarter ending November 2. Barington expressed concern over Macy's "large" expenditures, citing nearly $10 million spent on capital projects while neglecting buybacks or dividends. The two investors believe Macy's stocks are "mispriced" and see upside potential in management's new strategic plan.

    Barington pointed to Dillard's as a successful model for capital allocation, suggesting that Macy's could benefit from a similar approach. Since 2014, Macy's has spent $9.7 billion on capital expenditures, including $6.7 billion on property and equipment and $3 billion on technology, resulting in a loss of approximately $15 billion in market capitalization.

    Macy's real estate portfolio, valued at between $5-9 billion, is seen as a key asset by Barington and Thor. They propose creating a separate real estate subsidiary to collect market rents from Macy's retail operations and pursue other asset sale and redevelopment opportunities. This would allow the company to maximize its value for shareholders.

    Macy's has announced plans to close at least 150 underproductive stores through 2027, and has seen higher-than-expected gains in selling off assets, totaling $66 million in the most recent quarter. The company stands by its plan to invest in stronger aspects of its business and remains confident in its Bold New Chapter strategy.

    Barington and Thor representatives are set to join Macy's board of directors as part of a new plan, although the size of their stake in the retail giant was not disclosed. Shares in Macy's rose 3% in premarket trading on Monday following the news.