Macy’s Hires Advisers to Look at Digital Business as Activist Seeks Spinoff
Macy’s Hires Advisers to Look at Digital Business as Activist Seeks Spinoff
(Bloomberg) -- Macy’s Inc. said it has hired AlixPartners to evaluate its e-commerce operations as the department-store chain faces pressure from an activist investor to spin off the digital business.
The consulting firm is working with Macy’s board and financial advisers to determine how best to “unlock value,” Macy’s Chief Executive Officer Jeff Gennette said Thursday on a conference call to discuss quarterly earnings.
The comments come after activist investor Jana Partners last month said Macy’s should consider spinning off the e-commerce business, following in the footsteps of rival department-store chain Saks Fifth Avenue. Jana subsequently disclosed that it had taken a 1.5% stake in Macy’s.
“We appreciate Macy’s strong execution in the quarter and commend the board for promptly engaging advisers to undertake a review of ways to unlock the value of its strong e-commerce business,” Barry Rosenstein, Jana’s founder and managing partner, said in an emailed statement.
Macy’s may not end up splitting the business. On Thursday’s call, executives repeatedly discussed the “omnichannel” strategy, saying that digital sales are helped by a brick-and-mortar store companion.
The retailer has carried out analysis on both parts of its business before and ultimately concluded that its current Polaris strategy is the way to go, Gennette said in an interview Thursday. However, he added that the landscape has changed since then, so Macy’s will revisit the topic.
“We’re not new to this discussion,” Gennette said, adding that what has changed is the perception that these businesses are now worth more. “It’s very appropriate for us to get at it again.”
Macy’s is currently expanding its online operations. In a separate announcement on Thursday, the company said it will launch a digital marketplace in the second half of next year, aiming to broaden its product assortment and highlight third-party merchants. The company expects digital sales of $10 billion in 2023, with the new marketplace generating “incremental revenue on top of that target.”
Macy’s shares soared as much as 22% in New York after it reported better-than-expected earnings. The stock jumped 174% this year through Wednesday’s close.
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