Macy's Faces Renewed Activist Investor Pressure Amid Turnaround Efforts

Macy's continues to attract attention from activist investors as it struggles to rejuvenate its business and improve shareholder value. Following recent stake acquisitions by Barington Capital and Thor Equities, the iconic department store chain is once again at the center of proposals for strategic change.

These firms, via a joint presentation, have outlined a series of recommendations they believe could deliver a 150 to 200 percent return for shareholders over the next three years.

This latest development marks another chapter in Macy’s ongoing engagement with activist investors. Just last year, Arkhouse Management and Brigade Capital Management sought to take Macy’s private.

Their bid was rejected despite a sweetened offer of $24.80 per share, representing a 38 percent premium at the time. However, the campaign led to the addition of two new board members and underscored the persistent scrutiny of Macy’s turnaround efforts.

At the heart of Macy’s response is its Bold New Strategy, a multi-faceted plan focused on three key pillars: strengthening the Macy’s brand, accelerating luxury growth, and modernizing operations. Central to this strategy is the closure of 150 full-line stores, with 50 slated for this year, alongside the launch of "First 50 Stores," a pilot initiative aimed at reimagining store formats and brand emphasis.

Early results have been promising, with these stores delivering a 1.9 percent comparable sales increase in the third quarter, outperforming Macy’s overall decline of 2 percent in its go-forward business. Additionally, Macy’s is doubling down on luxury growth through its Bloomingdale's and Bluemercury brands, betting on continued strong performance in this segment.

However, Barington and Thor Equities believe Macy’s efforts fall short of achieving the transformative change necessary for meaningful shareholder gains.

Their proposal includes exploring strategic alternatives for Bloomingdale’s and Bluemercury, creating a real estate subsidiary to unlock the value of Macy’s property assets, and reducing capital expenditures from the current 4 percent of sales to a leaner 1.5 to 2 percent. The firms argue that these changes would free up resources for significant share buybacks, estimated at $2 to $3 billion over the next three years.

While Macy’s leadership has reaffirmed its commitment to the Bold New Strategy, the company faces heightened scrutiny. The stock’s year-to-date decline of approximately 15 percent underscores the urgency of delivering tangible results.

The company’s resistance to Arkhouse and Brigade’s takeover attempt last summer demonstrated its determination to remain independent, but the renewed pressure from Barington and Thor may compel additional measures to accelerate value creation.

The broader retail landscape adds complexity to Macy’s turnaround efforts. Competition from e-commerce giants and the shifting consumer preference toward online and experiential shopping continue to challenge traditional department stores.

Additionally, cost pressures and the evolving dynamics of the luxury market require careful navigation. Macy’s dual focus on revitalizing its core brand while expanding luxury offerings reflects a recognition of these headwinds but also demands consistent execution.

For investors, the presence of activist pressure could signal opportunities for improved efficiency and shareholder returns. However, the long-term success of Macy’s strategy hinges on balancing cost discipline, strategic investment, and responsiveness to shifting market dynamics. The outcome of these initiatives—and Macy’s openness to further collaboration with its new activist stakeholders—will determine the company’s trajectory in the coming years.