Activist Investor Starboard Urges Macy's to Strike Real-Estate Deals
Source: Dow Jones News
Activist investor Starboard Value LP is again urging Macy's Inc. to find ways to unlock the value of its vast real-estate holdings, including its famous Herald Square store in New York.
In a letter and presentation the investor sent to Macy's management on Sunday, Starboard said it supports the retailer's recently announced plans to cut costs and urged the company to follow through with real-estate deals that could put more cash in its coffers as it struggles with lackluster sales.
The real-estate strategy could "create meaningful and lasting value for shareholders" despite the challenging retail environment, Starboard said in the letter.
In an emailed statement, Macy's said it was reviewing Starboard's letter and materials. The company said Starboard's views are consistent with actions already under way at Macy's. The company said it looks forward to continued dialogue with Starboard and other shareholders.
Macy's last week said it would seek out joint-venture partners to take minority stakes in some properties after rejecting Starboard's earlier call for a full spinoff of its real-estate holdings.
Starboard's letter, reviewed by The Wall Street Journal, reiterates its view that the company's properties are worth $21 billion, all told, and that the sale of even a small stake in Macy's real estate could help drive the company's shares higher.
Starboard suggested two separate joint ventures, one for Macy's landmark properties like Herald Square and a second for its hundreds of mall locations.
Last week, Macy's announced disappointing holiday sales and said it would slash jobs and cut costs. It also said it was hiring a new adviser to explore joint-venture deals for its real estate and that an earlier adviser, real-estate developer Tishman Speyer, was interested in bidding.
Department stores were challenged in the period by consumers buying heavily online, though Macy's pointed to unseasonably warm weather, which hurt winter buying, and a strong U.S. dollar, which slowed tourist spending.
Starboard first disclosed a stake in Macy's in July. In its Sunday letter, the investor said it believes the stock could trade as high as $70, nearly double its Friday closing price of $35.89.
The letter implies that Starboard has given the company a detailed operational plan for how it believes the business could be turned around, but the activist isn't sharing that plan publicly at Macy's request.
Write to David Benoit at david.benoit@wsj.com and Suzanne Kapner at Suzanne.Kapner@wsj.com
(END) Dow Jones Newswires
January 10, 2016 23:55 ET (04:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Source: Dow Jones News
Activist investor Starboard Value LP is again urging Macy's Inc. to find ways to unlock the value of its vast real-estate holdings, including its famous Herald Square store in New York.
In a letter and presentation the investor sent to Macy's management on Sunday, Starboard said it supports the retailer's recently announced plans to cut costs and urged the company to follow through with real-estate deals that could put more cash in its coffers as it struggles with lackluster sales.
The real-estate strategy could "create meaningful and lasting value for shareholders" despite the challenging retail environment, Starboard said in the letter.
In an emailed statement, Macy's said it was reviewing Starboard's letter and materials. The company said Starboard's views are consistent with actions already under way at Macy's. The company said it looks forward to continued dialogue with Starboard and other shareholders.
Macy's last week said it would seek out joint-venture partners to take minority stakes in some properties after rejecting Starboard's earlier call for a full spinoff of its real-estate holdings.
Starboard's letter, reviewed by The Wall Street Journal, reiterates its view that the company's properties are worth $21 billion, all told, and that the sale of even a small stake in Macy's real estate could help drive the company's shares higher.
Starboard suggested two separate joint ventures, one for Macy's landmark properties like Herald Square and a second for its hundreds of mall locations.
Last week, Macy's announced disappointing holiday sales and said it would slash jobs and cut costs. It also said it was hiring a new adviser to explore joint-venture deals for its real estate and that an earlier adviser, real-estate developer Tishman Speyer, was interested in bidding.
Department stores were challenged in the period by consumers buying heavily online, though Macy's pointed to unseasonably warm weather, which hurt winter buying, and a strong U.S. dollar, which slowed tourist spending.
Starboard first disclosed a stake in Macy's in July. In its Sunday letter, the investor said it believes the stock could trade as high as $70, nearly double its Friday closing price of $35.89.
The letter implies that Starboard has given the company a detailed operational plan for how it believes the business could be turned around, but the activist isn't sharing that plan publicly at Macy's request.
Write to David Benoit at david.benoit@wsj.com and Suzanne Kapner at Suzanne.Kapner@wsj.com
(END) Dow Jones Newswires
January 10, 2016 23:55 ET (04:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
