The conclusion of Macy’s proxy fight may bring temporary relief, but the struggle for the future of the iconic department store is far from over. The battle between Macy’s and activist investors Arkhouse Management and Brigade Capital Management has been ongoing, with both sides vying for control of the struggling retailer. While the recent board appointments may appease Arkhouse to some extent, there are concerns that their emphasis on real estate, rather than retail, could spell the end for Macy’s.
Macy’s has faced numerous challenges in recent years, losing market share to competitors like T.J. Maxx, Target, and online retailers. The company’s stock price has also taken a hit, sinking to a 10-year low in April 2020. CEO Tony Spring, who took on the role in February, has outlined his vision for turning the retailer around. His plan includes closing underperforming Macy’s stores and investing in locations that have shown stronger sales, as well as focusing on the company’s higher-end chains, Bloomingdale’s and Bluemercury.
On the other hand, Arkhouse and Brigade’s buyout effort threatens to change the direction of Macy’s entirely. They have begun conducting due diligence and have raised their bid to acquire the company. While Arkhouse claims they intend to keep Macy’s stores open and run the company as a retailer, there are concerns that their primary focus is on extracting value from Macy’s real estate assets. This has led some experts to compare the potential outcome to the long liquidation process of Sears.
The recent settlement between Macy’s and Arkhouse, which includes the appointment of two new directors to the board, may buy the retailer some time to implement Spring’s turnaround strategy. However, it remains to be seen whether this will be enough to drive up the value of the company and secure its future. The two new directors bring extensive experience in retail and real estate, but their independence from Arkhouse and Brigade does not necessarily tip the balance in Macy’s favor.
The battle for Macy’s is far from over, and the outcome will have significant implications for the future of the department store. Shareholder activism is a performance-based skill set, meaning that if Macy’s can deliver strong results, it may be able to fend off the activist investors. However, if the company fails to meet expectations, all the governance changes in the world may not be enough to save it.
In conclusion, while the conclusion of the proxy fight may provide temporary relief for Macy’s, the struggle for its future continues. The battle between the retailer and activist investors highlights the challenges facing traditional department stores in the current retail landscape. The outcome will ultimately depend on Macy’s ability to adapt and thrive in an increasingly competitive market.
