Jana Partners invests in Macy’s to drive e-commerce spin-off

Activist shareholders acquired shares

Macy’s Ltd

NS 2.85%

People familiar with the matter are urging well-known retailers to spin off their fast-growing e-commerce business.

People said Jana Partners LLC wrote to its board of directors Wednesday, proposing to separate the online unit with annual sales of about $ 8 billion.

Macy’s’ largest department store, Saks Fifth Avenue, Separate e-commerce business from store operations As part of a transaction involving additional investment. Yana is paying attention to a similar arrangement, and some said Macy’s e-commerce business is already attracting attention from companies that can invest in conjunction with spin-offs.

New York-based Macy’s, which also owns the more upscale Bloomingdale’s brand, was hit hard by the Covid-19 pandemic last year, like other department store brands, and temporarily closed its stores. Closed. Online sales, on the other hand, are skyrocketing across the industry as more customers shop at home, avoiding crowded areas.

Or Trend acceleration has been going on for years Shoppers have abandoned department stores (the traditional mainstay of retail) and are now favoring e-commerce. Consumers have returned to malls and physical stores this year as vaccination rates have risen, but many are also sticking to the online shopping routines they adopted during the pandemic.

As a result, the following major retailers’ impetus has been strengthened:

Walmart Ltd

You can combine your e-commerce platform with a physical store to process online orders, give shoppers a closer look at your products, and in some cases even accept and return digital orders. E-commerce giant Ltd

Recently announced Plans to open several large retail stores It operates in the same way as a department store and is part of an effort to expand sales of clothing and household items.

Jana believes that the standalone e-commerce business is worth a multiple of Macy’s’ current market value, which reached about $ 7 billion on Thursday. Retailers’ market capitalization was well above $ 20 billion in 2015.

Macy’s share has declined significantly over the past few years, Online Only Retailer Ratings like that

Farfetch Ltd

And Mytheresa soared. After bottoming out in 2020, Macy’s shares recovered with expectations for continued growth in digital sales and are now trading at about five times the level of those days. After the Wall Street Journal reported on Yana’s stock, Thursday’s share price closed at $ 23.11, up nearly 3%.

Yana hinted at Macy’s interest at the 13D Monitor Active-Passive Investor Summit in New York last week, suggesting that retailers should separate their e-commerce business, but said Yana provided funding and other details. Did not mention.

It’s not clear how Macy’s reacts to Yana’s advance.

Jeff Gennette, Macy’s CEO, emphasizes that the company aims to provide a seamless experience between the website and the store. He said at a meeting in September that nearly 70% of Macy’s customers shop in multiple ways. “We believe that stores, mobiles, and our websites are stronger just to be together than to be alone,” he said.

Jennet said he expects the company to sell digitally. Reach $ 10 billion within 3 years.. In the holiday quarter, which ended in January 2021, digital accounted for 44% of net sales.

Macy’s total sales for the year ended January 2021 decreased from approximately $ 25 billion in the previous year to $ 18 billion. The company forecasts revenues of nearly $ 24 billion this year and a recovery in profitability. Last week, Michaels Cos. Two new directors have joined, the CEO of the company and an executive of Zipcar.

Earlier this year, Hudson’s Bay Co. announced that it would split to take advantage of the surge in online shopping during a pandemic. (It’s a financial move and the two businesses are still integrated from the customer’s perspective.) Venture capital firm Insight Partners has invested $ 500 million in a minority stake in to bring the business to $ 2 billion. I said that I would evaluate it.

Macy’s has faced campaigns from activist investors at least for the third time in recent years. But as a sign of how pandemics and e-commerce have reshaped retail, investors have previously asked the company to unleash the value of real estate holdings.

In 2015, Starboard Value LP invested in Macy’s and called on the company to: Spin off that real estateIncludes suburban malls and hundreds of stores in the city centre. Macy’s rejected the idea and promised to find a joint venture partner for the property instead. The retailer has announced plans to redevelop some space and build an office tower above New York City’s flagship Herald Square store.

Macy’s rival

Coles Ltd

Also, a group of investors faced activist pressure earlier this year Tried to control the board.. They called on Coles to take a variety of actions, including the addition of directors with retail experience.Both sides reached later Contract to add 3 directors..

Based in Newyork, Jana was founded in 2001 by Barry Rosenstein. Upset by companies such as Whole Foods Market, which was later sold to Amazon,

Callaway Golf Ltd

Write to Dana Cimilluca at And in Cara Lombardo

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Jana Partners invests in Macy’s to drive e-commerce spin-off

Source link Jana Partners invests in Macy’s to drive e-commerce spin-off

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