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group of investors is urging Macy's to explore options for its real estate and potentially separate some of its retail brands. The push comes from Barington Capital Group, L.P. and Thor Equities LLC, who released a presentation outlining their recommendations ahead of Macy's quarterly earnings results.
The investors believe that Macy's valuable real estate portfolio, including its flagship property at Herald Square in New York City, is worth between $5-$9 billion. They suggest creating a separate real estate subsidiary to collect market rents from retail operations and pursue other asset sale and redevelopment opportunities.
Macy's has responded to the plan, stating that its board and management team are committed to delivering sustainable, profitable growth and driving shareholder value. However, some industry experts caution against selling or splitting off assets, citing mixed results from similar efforts by other chains.
Selling real estate isn't a cure-all for Macy's, according to Ryan Dossey of SoldFast. He notes that asset stripping can lead to high rents and financial strain, as seen in the case of Red Lobster after its 2014 acquisition.
As for unloading Bloomingdale's and Bluemercury, experts have differing opinions. Evan Mann of Gimme Credit suggests that selling Bloomingdale's could be difficult due to its lower name recognition compared to Macy's. However, Bluemercury's appeal to a younger audience may make it more valuable to retain.
Mann believes that Macy's can turn things around with a focus on growing its online presence and strengthening its e-commerce capabilities. The company has already unveiled a turnaround plan earlier this year, which Mann says remains solid.
