Macy's Buyout? Private ownership bid

[ClownLoach]

This is looking more ominous. One of these buyers is a firm that specializes in Fast Eddie style transactions that will rob the company of its real estate and leave it a debt ridden hulk that will hemorrhage cash until it collapses. And Macy's still owns far more real estate than we thought, with the value potentially as high as $7B rendering the company worth more read than alive.

https://www.retaildive.com/news/macys-r ... rd/702506/

[storewanderer]

This is looking more ominous. One of these buyers is a firm that specializes in Fast Eddie style transactions that will rob the company of its real estate and leave it a debt ridden hulk that will hemorrhage cash until it collapses. And Macy's still owns far more real estate than we thought, with the value potentially as high as $7B rendering the company worth more read than alive.

https://www.retaildive.com/news/macys-r ... rd/702506/

They probably held on to the real estate to like you pointed out help justify keeping stores open. That was a smart move. Hopefully they will be able to keep this deal from happening and keep their owned real estate.

I don't like seeing these old entrenched companies with solid assets gutted. This will not end well for anyone except some investors looking for a quick buck. And even for those investors they will take their quick buck and throw it at some other thing and eventually something they throw it at won't work out as intended and they'll get burned too.

[ClownLoach]

This is looking more ominous. One of these buyers is a firm that specializes in Fast Eddie style transactions that will rob the company of its real estate and leave it a debt ridden hulk that will hemorrhage cash until it collapses. And Macy's still owns far more real estate than we thought, with the value potentially as high as $7B rendering the company worth more read than alive.

https://www.retaildive.com/news/macys-r ... rd/702506/

They probably held on to the real estate to like you pointed out help justify keeping stores open. That was a smart move. Hopefully they will be able to keep this deal from happening and keep their owned real estate.

I don't like seeing these old entrenched companies with solid assets gutted. This will not end well for anyone except some investors looking for a quick buck. And even for those investors they will take their quick buck and throw it at some other thing and eventually something they throw it at won't work out as intended and they'll get burned too.

Obviously the management many years ago understood the value of owning their property to ensure the company lives on for decades or even centuries. It just seems wrong that these vultures come along to pillage these companies in an effort to shutter them and replace them with today's modern debt-ridden companies where we all pay higher prices and employees make less money in an effort to pay the interest on the debt.

[veteran+]

History keeps repeating itself with these corporate raiders.............rapaciously!

[ClownLoach]

Macy's announced they're laying off 3.5% of their workforce and closing 5 stores. No further update on the alleged offer to buy out the company.

San Leandro, Simi Valley, Arlington VA, Lihue HI, and Tallahassee FL will close.

What is very important is the discussion that now 99% of their mall based stores are profitable, which I would have to assume means that they truly are turning the corner from self-initiated closures. But they're still going to likely be at the mercy of operators of failing malls who seem to give up on driving business as they move towards redevelopment of their properties.

https://www.cnbc.com/2024/01/18/macys-t ... costs.html

[Alpha8472]

The San Leandro, California Macy's is in a dying mall. The interior has been closed off. Most stores have closed. The mall announced in 2022 that it was going to be demolished for housing and a tech/science center. This mall is a scary and dangerous place.

I am surprised that Macy's has been here since the 1950s.

[storewanderer]

Macy's typically does a restructure some (many) years in January so this is no surprise.

Getting 99% of the mall stores to profitability is a major accomplishment. I can see they've cut expenses to the bone in some of these stores but if that is what they have to do... it appears their "neighborhood store" model or whatever they called it where they cut mix, reduced the number of brands, reduced the number of registers, etc. in low volume stores actually worked. The outgoing CEO was with Macy's for quite a while, I think he is leaving on a good note. We will see what happens next.

Simi Valley - newish stores - maybe almost 20 years by now. They had 2 stores there (one was Robinsons May) - one of those exterior "lifestyle" centers where a walk from one Macys to the other felt like a real trek. They closed one of the stores maybe 5? years ago. Interesting to see the other one closing.

[ClownLoach]

Macy's typically does a restructure some (many) years in January so this is no surprise.

Getting 99% of the mall stores to profitability is a major accomplishment. I can see they've cut expenses to the bone in some of these stores but if that is what they have to do... it appears their "neighborhood store" model or whatever they called it where they cut mix, reduced the number of brands, reduced the number of registers, etc. in low volume stores actually worked. The outgoing CEO was with Macy's for quite a while, I think he is leaving on a good note. We will see what happens next.

Simi Valley - newish stores - maybe almost 20 years by now. They had 2 stores there (one was Robinsons May) - one of those exterior "lifestyle" centers where a walk from one Macys to the other felt like a real trek. They closed one of the stores maybe 5? years ago. Interesting to see the other one closing.

The incoming CEO ran Bloomingdales, so there should be a continuation of the Polaris strategy. It sounds like the Bloomie's small format stores are successful, which makes sense as they have a lot of runway to add them into markets without a full size Bloomingdales.

I see a lesser opportunity to reduce a full size to a Bloomie's, but there is another angle that is not being discussed as much that can be observed at South Coast Plaza. The Bloomingdales there has gone through a series of experiments where the front of the building (furthest from the mall) has been used as subleased restaurant space. They began with a big name, high end gourmet restaurant that eventually closed. Then they went more down market and tried to get a flagship location for a burger concept that tried to escape the Cosmopolitan hotel in Las Vegas but flamed out spectacularly at SCP and the Pearl district in Portland. This time around they diversified and have a partial food court setup built around two smaller full service restaurants including the rival of famous packed dumpling house Din Tai Fung, and the third time was the winner. At the other end of the store they've rented the front corner to Nespresso for a store and service center (note this is not operated at all by Bloomingdales employees, it's a full sublease). So at this point Bloomingdales has subleased about 25,000 Sq ft of what was the West Coast flagship and it has paid dividends by bringing a ton of traffic to their doors.

I think this long researched sublease program from South Coast Plaza could be expanded to the rest of Bloomingdales as well as the right locations of Macy's. It reduces expenses and brings traffic, a win-win. I think there is far less upside for the strip mall mini Macy's stores versus the Bloomie's concept. But in general it sounds like the Bloomingdales line of stores has been out-innovating the Macy's line so getting their CEO should be a big win as the best ideas get to roll out onto a much larger stage.

[norcalriteaidclerk]

https://www.axios.com/2024/01/22/macys- ... d-rejected

Good for them trying to avoid the private equity trap that has doomed many iconic retailers over the years, speaking of which it's hard to believe that Mervyn's has been gone roughly 15 years now.

[storewanderer]

https://www.axios.com/2024/01/22/macys- ... d-rejected

Good for them trying to avoid the private equity trap that has doomed many iconic retailers over the years, speaking of which it's hard to believe that Mervyn's has been gone roughly 15 years now.

I miss Gottschalks a lot more than Mervyns..