Dec 11th, 2023 – The real-estate investment firm “Arkhouse Management” and the asset manager “Brigade Capital Management” have jointly proposed a $5.8 billion acquisition of Macy’s; neither the two key investors nor Macy’s have publicly commented yet, the news comes from the Wall Street Journal, which reported it first.
The offer, valuing Macy’s shares at $21 per share, represents a premium over the closing price of just $17 a share on Friday, although the stock had seen a significant decline, around 17%, from the beginning of 2023. The well known American department store chain is facing many challenges in competing with online retailers: Macy’s has made several efforts to revitalize its brick-and-mortar stores, including opening 30 new stores on strip mall locations, but hasn’t been able to take on e-commerce giants like Amazon (AMZN). The company experienced a 7% year-over-year sales decline in the third quarter and its recent optimism depends more on the strong performances of its owned brands, such as “Bloomingdale’s” and “Bluemercury”, rather than on the flagship Macy’s chain itself. This year the retail sector has encountered challenges due to the unpredictable changes in consumer spending, as interest rates keep being volatile and inflation stays high, contrarily, online shopping has proved evidence of robust consumer spending during Black Friday and Cyber Monday.
Macy’s is becoming an interesting acquisition target, as it grapples with sagging sales not only from the online competitors, but also for brands preferring direct-to-consumer sales over traditional department store wholesale models. The proposed acquisition underscores the evolving landscape of retail, where traditional department stores face the dual pressures of online competition and changing consumer preferences; investors responded positively with Macy’s stock witnessing a notable uptick, rising more than 15% in morning trading following the news.
Author: Ilaria Savignoni