What: New activist investors are pushing Macy's to accelerate value creation through aggressive measures, challenging the company's gradual transformation approach despite positive performance from Bloomingdale's and Bluemercury divisions.

Why it is important: This situation exemplifies how department stores must navigate competing pressures: satisfying shareholder demands for immediate returns while maintaining the operational flexibility needed for long-term survival in a rapidly evolving retail landscape.

Macy's faces intensified pressure from activist investors Barington Capital and Thor Equities, who are advocating for aggressive measures including the spinoff of Bloomingdale's and Bluemercury, creation of a real estate subsidiary, and substantial stock buybacks. This follows earlier pressure from Arkhouse and Brigade Capital, who raised their buyout offer to $6.6 billion. The activists point to the significant value gap between Macy's market capitalisation and its estimated $7.9-10.5 billion real estate portfolio. Meanwhile, Macy's continues to pursue its "Bold New Chapter" strategy, which has shown mixed results. While the core Macy's business faces challenges, Bloomingdale's and Bluemercury have demonstrated positive growth with comparable sales increases of 3.2% and 3.3% respectively. The company's approach includes closing underperforming stores while expanding its luxury divisions, reflecting a balanced strategy between immediate value creation and long-term sustainability. This tension between activist demands and operational transformation highlights the complex challenges facing traditional department stores in today's retail landscape.

IADS Notes: Macy's current challenges mirror the broader transformation sweeping through the department store sector. In December 2024, activist investors Barington Capital and Thor Equities pressed for aggressive changes, including spinning off Bloomingdale's and Bluemercury , highlighting the tension between immediate shareholder returns and long-term viability. This follows a pattern of increasing pressure, with Arkhouse and Brigade Capital raising their buyout offer to $6.6 billion in March 2024 . The company's "Bold New Chapter" strategy, showing early promise through its "First 50" store initiative , represents a measured approach to transformation, balancing store optimisation with portfolio diversification. This is evidenced by Bloomingdale's 3.2% comparable sales growth and Bluemercury's 3.3% increase in Q3 2024 , contrasting with Macy's core business decline. The strong demand for Macy's real estate assets, leading to accelerated store closures , underscores the complex balance between monetising valuable properties and maintaining operational viability. This multi-faceted pressure on Macy's, combining activist demands, real estate value, and operational transformation, exemplifies the challenges facing traditional department stores as they navigate between immediate financial demands and sustainable business evolution.

Activists go shopping at Macy’s (again)