Macys Union Square closing

[storewanderer]

I am wondering if the Union Square store was basically a consolation prize to activist investors. It has been claimed that the Herald Square store, if sold, would be worth more than the entire company's valuation, so I'm sure there is tremendous pressure from certain investors to sell it. Perhaps selling this Union Square store is a way for the company to get those people off its back.

The clause about not closing until a buyer is found is rather interesting. Who exactly is going to be buying it? Probably not another retailer. With the decining commercial rents in San Francisco, I'm wondering if they may do a sale-leaseback and keep it open as long as the rent declines by enough to justify it. That seems more likely than someone wanting the space for non-retail use.

If this was the case they wouldn't have announced the closure. This closure announcement came out like a snake trying to escape from a can. 150 stores closing, no store list, but this closure came out within minutes.

The only way I see it staying open is if they can't find an acceptable deal to sell it. But I also wonder if they need these proceeds for some of their other initiatives and those initiatives are contingent on this sale occurring.

The store has 400 employees and they are under UFCW. For such a large store this is fewer employees than I'd expect.

We will see if it stays open until a buyer is found and in what form it stays open in. For instance, will they start closing floors/downsizing? Will they still do events? If they continue to run it strongly through 2024 that will be a sign they may have continued interest. But if that was the case why announce the store is closing in the first place?

They are very clear about this: the store WILL close. Not "the building is for sale, the future of the store will depend on the sale of the building that occurs." There doesn't seem to be any gray area other than "when" the store will close. Not "if."

What confuses me is they very recently did a lot of paint and lighting upgrades inside this store, and some (few) floors.

[buckguy]

Two pages of mostly speculation, hyperbole and no links. So here's one without a paywall that includes all the ambiguities: https://www.sfgate.com/bayarea/article/ ... 691130.php

[ClownLoach]

I am wondering if the Union Square store was basically a consolation prize to activist investors. It has been claimed that the Herald Square store, if sold, would be worth more than the entire company's valuation, so I'm sure there is tremendous pressure from certain investors to sell it. Perhaps selling this Union Square store is a way for the company to get those people off its back.

The clause about not closing until a buyer is found is rather interesting. Who exactly is going to be buying it? Probably not another retailer. With the decining commercial rents in San Francisco, I'm wondering if they may do a sale-leaseback and keep it open as long as the rent declines by enough to justify it. That seems more likely than someone wanting the space for non-retail use.

Clearly it was announced because they wanted to stick it in the face of the activist investors. It's gone, we are selling it and taking the money to reinvest in the business, you vultures aren't going to swoop in and steal the money for yourselves instead, get the hell out of here and don't let the door hit you... You know the rest. They are telling the activists to leave because they are going to cash out these big properties that also underperform, which means a lot less incentive for these people to try to take over. And I think you're right that they may decide to do sale-leaseback if the activists get nasty about the sale as they see the money slip through their greasy fingers. These firms want to loot this company the same way Eddie Lampert did Sears.

I mentioned before that I suspect the biggest mall managers like Simon, General Growth and others are heavily invested in Macy's. This company is putting up a stronger fight against these activists than others in the same position. Usually retailers in these situations quickly work out a deal to sell, while Macy's is repelling them. Even with 150 buildings closing, the mall managers all know that if Macy's were to go away as the activists would like then that would truly be the end of the American shopping mall and their companies too. This is why I believe they have a vested interest in the company and why the company is behaving the way it does.

[ItsAshleyFTW]

I am wondering if the Union Square store was basically a consolation prize to activist investors. It has been claimed that the Herald Square store, if sold, would be worth more than the entire company's valuation, so I'm sure there is tremendous pressure from certain investors to sell it. Perhaps selling this Union Square store is a way for the company to get those people off its back.

The clause about not closing until a buyer is found is rather interesting. Who exactly is going to be buying it? Probably not another retailer. With the decining commercial rents in San Francisco, I'm wondering if they may do a sale-leaseback and keep it open as long as the rent declines by enough to justify it. That seems more likely than someone wanting the space for non-retail use.

Clearly it was announced because they wanted to stick it in the face of the activist investors. It's gone, we are selling it and taking the money to reinvest in the business, you vultures aren't going to swoop in and steal the money for yourselves instead, get the hell out of here and don't let the door hit you... You know the rest. They are telling the activists to leave because they are going to cash out these big properties that also underperform, which means a lot less incentive for these people to try to take over. And I think you're right that they may decide to do sale-leaseback if the activists get nasty about the sale as they see the money slip through their greasy fingers. These firms want to loot this company the same way Eddie Lampert did Sears.

I mentioned before that I suspect the biggest mall managers like Simon, General Growth and others are heavily invested in Macy's. This company is putting up a stronger fight against these activists than others in the same position. Usually retailers in these situations quickly work out a deal to sell, while Macy's is repelling them. Even with 150 buildings closing, the mall managers all know that if Macy's were to go away as the activists would like then that would truly be the end of the American shopping mall and their companies too. This is why I believe they have a vested interest in the company and why the company is behaving the way it does.

I remember the reason JCPenney was bought out of bankruptcy back in 2020 was that the mall owners thought it would be too catastrophic to lose an anchor store at so many of their malls. I could imagine the same would be the case with Macy's, especially since Macy's is much more iconic and valuable. What other store could boast that they have a huge parade every year in NYC?

I also think the politicians/unions running NYC would throw a temper tantrum if Macy's in Herald Square closed; it would amount to too much revenue loss for the city. Macy's is also one of the last retail stores in the US to primarily use unionized employees; Home Depot, Target, and Walmart are all strictly non-union.

[storewanderer]

I am wondering if the Union Square store was basically a consolation prize to activist investors. It has been claimed that the Herald Square store, if sold, would be worth more than the entire company's valuation, so I'm sure there is tremendous pressure from certain investors to sell it. Perhaps selling this Union Square store is a way for the company to get those people off its back.

The clause about not closing until a buyer is found is rather interesting. Who exactly is going to be buying it? Probably not another retailer. With the decining commercial rents in San Francisco, I'm wondering if they may do a sale-leaseback and keep it open as long as the rent declines by enough to justify it. That seems more likely than someone wanting the space for non-retail use.

Clearly it was announced because they wanted to stick it in the face of the activist investors. It's gone, we are selling it and taking the money to reinvest in the business, you vultures aren't going to swoop in and steal the money for yourselves instead, get the hell out of here and don't let the door hit you... You know the rest. They are telling the activists to leave because they are going to cash out these big properties that also underperform, which means a lot less incentive for these people to try to take over. And I think you're right that they may decide to do sale-leaseback if the activists get nasty about the sale as they see the money slip through their greasy fingers. These firms want to loot this company the same way Eddie Lampert did Sears.

I mentioned before that I suspect the biggest mall managers like Simon, General Growth and others are heavily invested in Macy's. This company is putting up a stronger fight against these activists than others in the same position. Usually retailers in these situations quickly work out a deal to sell, while Macy's is repelling them. Even with 150 buildings closing, the mall managers all know that if Macy's were to go away as the activists would like then that would truly be the end of the American shopping mall and their companies too. This is why I believe they have a vested interest in the company and why the company is behaving the way it does.

I remember the reason JCPenney was bought out of bankruptcy back in 2020 was that the mall owners thought it would be too catastrophic to lose an anchor store at so many of their malls. I could imagine the same would be the case with Macy's, especially since Macy's is much more iconic and valuable. What other store could boast that they have a huge parade every year in NYC?

I also think the politicians/unions running NYC would throw a temper tantrum if Macy's in Herald Square closed; it would amount to too much revenue loss for the city. Macy's is also one of the last retail stores in the US to primarily use unionized employees; Home Depot, Target, and Walmart are all strictly non-union.

Less than 10% of Macys total workforce is unionized... they do not "primarily" use unionized employees. Only certain locations... That number is about to get even lower with the Union Square closure.

What is ironic here is as we sit today Macys has 500 stores. After 150 closures they will have 350 stores. I do think this will have a very negative effect on a number of malls. That number of malls that will have a negative effect isn't 150 but it is probably over 100. So at this point after this closure spree Macys will be doing that damage to a lot of malls.

JC Penney as we sit today has 663 stores and 3 are currently closing. How many of those are in actual malls, I do not know. Maybe someone knows that? I assume over half of their stores are in malls?

I actually think the mall ownership group/Authentic Brands Group would have been better off buying out Macys than JCP. But had they not bought JCP, it would probably be out of business. That is probably where it should be, but I guess it is better to have them still around.

[ClownLoach]

Clearly it was announced because they wanted to stick it in the face of the activist investors. It's gone, we are selling it and taking the money to reinvest in the business, you vultures aren't going to swoop in and steal the money for yourselves instead, get the hell out of here and don't let the door hit you... You know the rest. They are telling the activists to leave because they are going to cash out these big properties that also underperform, which means a lot less incentive for these people to try to take over. And I think you're right that they may decide to do sale-leaseback if the activists get nasty about the sale as they see the money slip through their greasy fingers. These firms want to loot this company the same way Eddie Lampert did Sears.

I mentioned before that I suspect the biggest mall managers like Simon, General Growth and others are heavily invested in Macy's. This company is putting up a stronger fight against these activists than others in the same position. Usually retailers in these situations quickly work out a deal to sell, while Macy's is repelling them. Even with 150 buildings closing, the mall managers all know that if Macy's were to go away as the activists would like then that would truly be the end of the American shopping mall and their companies too. This is why I believe they have a vested interest in the company and why the company is behaving the way it does.

I remember the reason JCPenney was bought out of bankruptcy back in 2020 was that the mall owners thought it would be too catastrophic to lose an anchor store at so many of their malls. I could imagine the same would be the case with Macy's, especially since Macy's is much more iconic and valuable. What other store could boast that they have a huge parade every year in NYC?

I also think the politicians/unions running NYC would throw a temper tantrum if Macy's in Herald Square closed; it would amount to too much revenue loss for the city. Macy's is also one of the last retail stores in the US to primarily use unionized employees; Home Depot, Target, and Walmart are all strictly non-union.

Less than 10% of Macys total workforce is unionized... they do not "primarily" use unionized employees. Only certain locations... That number is about to get even lower with the Union Square closure.

What is ironic here is as we sit today Macys has 500 stores. After 150 closures they will have 350 stores. I do think this will have a very negative effect on a number of malls. That number of malls that will have a negative effect isn't 150 but it is probably over 100. So at this point after this closure spree Macys will be doing that damage to a lot of malls.

JC Penney as we sit today has 663 stores and 3 are currently closing. How many of those are in actual malls, I do not know. Maybe someone knows that? I assume over half of their stores are in malls?

I actually think the mall ownership group/Authentic Brands Group would have been better off buying out Macys than JCP. But had they not bought JCP, it would probably be out of business. That is probably where it should be, but I guess it is better to have them still around.

I am still extremely suspicious about Macy's ownership. I am convinced that the big mall management groups have either directly or through subsidiaries invested heavily in Macy's stock. Macy's is extraordinarily defensive of attempts by outsiders to push them out of shopping malls and sell their most valuable real estate unless the store is problematic like Union Square became. They're also extraordinarily defensive around outsiders like the activist firms who want to see the books and full ownership info.

It's like they work in lock-step with these mall management companies... They decide to walk away from properties together. Mall Mgr restructures loans to let them default without harming the credit line of the parent company and Macy's closes at or about the same time. So Macy's is essential to malls that want to stay open, but expendable where the mall wants to close. Yet it works as a symbiotic relationship maybe even better than JCPenney under its new direct ownership...

[storewanderer]

Macy's is the strongest department store anchor tenant these malls have. So the mall owners have a vested interest.

Sure Nordstrom may have a better reputation but they have so few stores they are no Macy's. Macy's has a good name, engages people via the annual parade/other events they sponsor, and has strong marketing. I may like Dillard's better and they have a decent store count but at the end of the day Dillard's does little marketing and otherwise does little to draw people into the mall and engage them.

So as I see it when Macy's leaves a mall, that mall is basically done. That is it for that mall as even a C- grade mall. Maybe it can limp along as a D+ mall with some sad JCP and sad Dillard's and a 20% tenanted food court as the facility deteriorates due to high vacancies but that never ends well.

That goes for Union Square too.

[Jeff]

. I may like Dillard's better and they have a decent store count but at the end of the day Dillard's does little marketing and otherwise does little to draw people into the mall and engage them.

I really wish Dillards would expand into Los Angeles. The Palmdale store is always clean, organized and the staff top notch. I rather travel an hour to that store than shop any of the Macys here. They just don't have the name here as Macys.

[ClownLoach]

. I may like Dillard's better and they have a decent store count but at the end of the day Dillard's does little marketing and otherwise does little to draw people into the mall and engage them.

I really wish Dillards would expand into Los Angeles. The Palmdale store is always clean, organized and the staff top notch. I rather travel an hour to that store than shop any of the Macys here. They just don't have the name here as Macys.

The problem is that outside of small local markets like Palmdale there is little awareness in LA. They would have to spend a fortune on advertising in the 2nd most expensive ad market in the US (1st being NY). They would have to open dozens of stores to offset just the advertising costs... And don't forget the incredible expense of construction and remodeling today, assuming they can find quality former JCP, Macy's, Sears, or Nordstrom buildings available in quality malls that aren't going to be leveled in the next few years. They would need at least twenty stores to offset the advertising costs and still expect to lose money for a decade. You're talking about a multi billion dollar investment just to get into the core LA/OC/IE/Ventura/SB market. If it doesn't go perfectly it bankrupts the entire chain and it liquidates. They aren't going to come to LA or any other high cost of operation market. Macy's successfully squeezed them out in the 90's and prevented their expansion. What I would agree on is that if they had been able to overcome the blockade on space I think the malls with Macy's and Dillards (and either a JCP or Nordstrom depending on clientele) would greatly outperform those without a Dillards. I bet Macy's regrets this decision today.

[storewanderer]

. I may like Dillard's better and they have a decent store count but at the end of the day Dillard's does little marketing and otherwise does little to draw people into the mall and engage them.

I really wish Dillards would expand into Los Angeles. The Palmdale store is always clean, organized and the staff top notch. I rather travel an hour to that store than shop any of the Macys here. They just don't have the name here as Macys.

The problem is that outside of small local markets like Palmdale there is little awareness in LA. They would have to spend a fortune on advertising in the 2nd most expensive ad market in the US (1st being NY). They would have to open dozens of stores to offset just the advertising costs... And don't forget the incredible expense of construction and remodeling today, assuming they can find quality former JCP, Macy's, Sears, or Nordstrom buildings available in quality malls that aren't going to be leveled in the next few years. They would need at least twenty stores to offset the advertising costs and still expect to lose money for a decade. You're talking about a multi billion dollar investment just to get into the core LA/OC/IE/Ventura/SB market. If it doesn't go perfectly it bankrupts the entire chain and it liquidates. They aren't going to come to LA or any other high cost of operation market. Macy's successfully squeezed them out in the 90's and prevented their expansion. What I would agree on is that if they had been able to overcome the blockade on space I think the malls with Macy's and Dillards (and either a JCP or Nordstrom depending on clientele) would greatly outperform those without a Dillards. I bet Macy's regrets this decision today.

Dillards has little to no debt and an in-house construction company with mostly owned real estate. So any projects they do are handled by their in house construction company.

If they were to enter CA they would need to acquire the real estate. I am thinking with the various ideas on the table to redevelop malls into housing and other uses it may be difficult to pick up decent anchor spots.

Macy's California/Macy's West was very very predatory in its real estate practices in the 90's and 00's with the CHH purchase and Bullocks then with May. Macy's West was a far more upscale operation than most of Macy's historically in the 90's/prior then it started blurring after the May purchase (in my opinion the quality of the Macy's West operation took a nosedive after that). They did everything they could from a real estate perspective to keep serious competitors away from them and as you note this was at the great expense of many malls today. They also "chose" malls to "kill" by closing the the CHH store in a given mall and sending customers to the "other mall nearby" with the original Macy's (or two) in it. Then of course they would not let someone like Dillard's open at that "other mall nearby" and play the mall owners - look- you let Dillard's in, we will close at your mall and move to that other mall (the dead one where they closed the CHH store)... they did the closing CHH stores thing to malls in decline; Park Lake in Reno, Florin in Sacramento, etc. They let a few Gottschalks slip in but Gottschalks was not something they saw as a serious competitor. For whatever reason they were a lot more scared of Dillard's than Gottschalks- I keep bringing up the locations they "let" Dillards get in CA- Palmdale, El Centro, Stockton. These are not towns with a great reputation and I'm sure the arrogant Macy's West management laughed at the time that Dillards even went through with the stores in those locations; but look, those stores are still open today. I kind of thought it was a joke too until I went and saw those Dillards stores over the years and saw strong operations with good employees and customers who seemed happy shopping there. My understanding is the store in Stockton does quite well; not sure how the other two do.

I'd like to see Dillards try a couple more well placed stores in SoCal, I think they'd get a lot of free press/attention out of the development of the stores and enough curious customers to show up for a grand opening, their typical style is not to do much advertising so I'm not sure how that would work long term on retention. Another way they keep costs down is by not advertising much. They'll never penetrate the market but a couple more scattered stores would be useful in my opinion.

Other option is add stores in places more similar to their current stores; Bakersfield, Modesto, Fresno... buying for those stores may be more in line with the buying they do with AZ/Las Vegas anyway...