Another activist targets Macy's, advocating for budget reductions and real estate restructuring.

• Macy's is facing an activist push from Barington Capital and Thor Equities.
• The company is being pressured by dissidents to reduce capital expenditures, increase buybacks, and reevaluate its luxury brands and real estate portfolio.
• It's the fourth activist push at the company in the last decade.

Barington Capital, an activist investor, disclosed on Monday that it held a stake in the company and was pushing for cost-cutting measures, consideration of selling luxury brands, and a thorough examination of its real estate holdings.

In the last decade, the struggling department store has faced four activist pushes.

In premarket trading, Macy's shares rose approximately 3% due to news of an activist's partnership with private equity firm Thor Equities in its push, as stated in a Barington presentation. However, the dissidents did not reveal the extent of their stake.

While Macy's generates cash, management has opted to spend $10 billion on capital expenditures instead of buybacks or dividends, according to Barington's presentation.

Over the past decade, Macy's stock has lagged behind the S&P 500 and Retail Select indexes. Barington cited Dillard's, a smaller department store operator with a market cap of over $7 billion, as an example of successful capital allocation. Dillard's operates 273 stores across the US.

"Macy's stated that they are still confident in their Bold New Chapter strategy and are excited to interact with their shareholders, including Barington and Thor."

Macy's should consider increasing its buybacks and evaluating whether to sell off its top-performing Bluemercury and Bloomingdale's brands, as suggested by Barington.

Barington, like other activists, believes that Macy's should reassess its real estate portfolio. Barington values the portfolio at between $5 billion and $9 billion, in line with assessments by other activist investors. Barington suggests that Macy's should establish a separate subsidiary to manage its real estate assets, which could then charge rent to Macy's parent company while the subsidiary evaluates how to maximize value from those assets.

The company's namesake stores are experiencing declining sales, and Macy's has become an activist target again as it continues to close many mall anchors.

In February, the department store operator declared that it would close approximately 150 of its stores, which is about one-third of its total, by early 2027. The company plans to invest in the remaining 350 locations and its stronger chains, Bloomingdale's and Bluemercury.

In the most recent quarter that ended Nov. 2, Macy's reported a 2.4% decline in sales to $4.74 billion, with comparable sales for its owned and licensed businesses, as well as its online marketplace, decreasing by 1.3%.

Macy's delayed publishing its full quarterly results due to an investigation into an employee who concealed up to $154 million in delivery expenses on its financial records for almost three years. The company intends to release its results and outlook by December 11.

The sale of Macy's real estate could provide the business with additional cash. While Macy's has not disclosed which stores it has sold, it announced in late November that its asset sale gains in the most recent quarter totaled $66 million, exceeding its expectations.

Macy's has started reporting the sales performance of stores that will remain open after closing the latest round of namesake locations, which excludes some struggling mall stores. At the Macy's stores that will remain open beyond early 2027, comparable sales were down 0.9% on an owned-plus-licensed basis, including the third-party marketplace.

Thor Equities, a retail-focused private equity firm, was part of the buyout group that acquired Hurley several years ago.

The private equity firm that Barington Capital has partnered with is Thor Equities.