Macy’s Says No to Private Equity Buyout. Now What?

Sorry, private equity, this is one American legacy retailer you can’t have.

On Monday, the board of directors for Macy’s unanimously voted to end negotiations with activist investors Arkhouse and Brigade — both PE firms — to take the company private for roughly $7 billion at about $25 per share. A Macy’s executive said “the proposal lacks certainty of financing and does not deliver compelling value.” There’s little time for the board to celebrate its decision, though, as the department store has now entered a make-or-break moment.

It’s Go Time

With more than 165 years of doing business under its belt, a nationally televised Thanksgiving Day parade, and a prominent role in a classic Christmas movie, Macy’s is one of the most recognizable retail brands in the US. However, like most brick-and-mortar chains, its oversized, physical footprint has caused it to struggle in the digital days of one-click shopping:

• Macy’s — which also owns the Bloomingdale’s and Bluemercury brands — saw net sales fall 2.7% in the first quarter year-over-year, after dipping in both 2022 and 2023. In the past five years, its share price has fallen roughly 25%. However, the company believes it has a shot at a comeback.
• Last fall, Macy’s announced that it was cutting down on its mall-based centers in favor of boutique-style shops, which are roughly one-fifth the size of its megastores and offer more luxury items. A similar tactic is being used by Nordstrom, Target, Kohl’s, and others. Earlier this year, Macy’s announced it would close 150 of its stores, many of which are located in struggling malls. 

Miracle on 34th Street: The board’s decision this week wasn’t too surprising — it rejected a similar deal from Arkhouse and Brigade in January, when the two firms offered to buy the company for $5.8 billion. This only solidifies that the higher-ups at Macy’s are fully behind the brand’s turnaround strategy. Investors seem less enthusiastic. On Monday, its share price fell roughly 12%. Here’s hoping that Operation Boutique can pull off a Macy’s miracle.