Macy's former activist investor doesn't rule out a new takeover campaign
It's been almost one year since Macy's turned down a $6.9 billion buyout offer, and the activist investor isn't over the rejection.
Macy's ended conversations over the potential bid from Arkhouse and its partner, Brigade Capital Management, on July 15, 2024. The $24.80 per share offer is more than double Macy's current share price.
Arkhouse managing partner Gavriel Kahane told Yahoo Finance Executive Editor Brian Sozzi on the Opening Bid podcast (video above) that he is still "frustrated" over it.
"Most shareholders are obviously ... woulda, shoulda, coulda mid-twenties. The stock's trading in the low teens once again," Kahane said. He declined to say whether he would be taking another run at acquiring Macy's. Arkhouse remains a shareholder, but Kahane declined to disclose the size of its stake.
But another proposal doesn't seem off the table.
"Macy's is still publicly traded, still mispriced, and still in desperate need of someone coming in to save shareholders," Kahane said.
At the time, Macy's CFO Adrian Mitchell said the offer was "not compelling" given Macy's potential. Management opted to focus on its turnaround strategy under CEO Tony Spring, dubbed "A Bold New Chapter."
Mitchell, who recently announced his departure, said, "There was not enough evidence to indicate that any potential transaction was actionable ... you have to have the financing to do a transaction."
Kahane said the group "very much had financing." Macy's declined to comment.
Kahane said Macy's was correct to say its financing was "atypical" in that it did financing in two structures, one of which was "really real estate diligence dependent." The firm was eyeing Macy's large real estate portfolio, which includes its New York City Herald Square flagship.
He later added, "We appreciate that you think you're selling just a retail business, but as buyers, we're buying a retailer and a hundred million square feet of its real estate and therefore need real estate diligence in the normal course."
GlobalData managing director Neil Saunders said, "Macy's was right to reject the buyout offer."
"Macy's needs to be run as a retailer, not as a real estate play," Saunders told Yahoo Finance. "Yes, there is a lot of work to do in order to get Macy's back on track, but the playbook of current management is a lot more convincing than those that want cash in for short-term gain."
But Morningstar analyst David Swartz isn't convinced.
"Macy's has tried various turnaround plans for years that none of which have exactly worked," he said over the phone. "It's hard to have a lot of confidence that anything is going to work in the long term and in the short term. Investors have pretty much lost confidence, and there just isn't a lot of reason for Macy's to be public anymore."
As part of its turnaround strategy, Macy's plans to close 66 unprofitable stores this year and 150 total in the next three years.
When asked if he believed Macy's was the next Sears, Kahane said there is a "corpse-ridden path of retailers that didn't take private equity bids when they could have and should have for the sake of their shareholders."
Macy's is set to report its first quarter earnings next Wednesday as it faces flagging consumer sentiment and the impact of President Trump's tariffs.
Based on Bloomberg consensus estimates, Wall Street expects same-store sales to decline 3.65% after same-store sales grew 0.2% in its fiscal fourth quarter report, which missed the Street's estimate of 1.23%.
Adjusted earnings per share are expected to come in at $0.14 alongside revenue of $4.44 billion.
In the fourth quarter, Macy's projected 2025 revenue of $21 billion to $21.4 billion, below 2024's $22.29 billion and missing estimates of $21.66 billion.
For the year, same-store sales are expected to decrease between 0.5% to 2% year over year, compared to the 0.71% increase Wall Street anticipated.
Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on X at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
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