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There may still be hope for Macy’s stock (M).
On Friday, Citi upgraded shares of the 165-year-old department store from “sell” to “neutral.” The company’s team initially downgraded Macy’s stock after the company’s proposal to take the company private at $21 per share, a 32% premium to the stock price, was made public in early December.
Macy’s stock price rose above $20 on the news, but Citi analysts led by Paul LeJuet were skeptical that anything would come of the proposal.
Macy’s acknowledged in January that it had rejected a $5.8 billion takeover offer from ArkHouse and its partner Brigade Capital Management, citing financing concerns and not offering enough value. Ta.
The stock is currently down about 13% from its December high. Lejuès remains “skeptical” about the company, but wrote in a note to clients that the recent selloff has increased Macy’s risk/reward ratio.
Still, Ark House hasn’t given up. The investment firm said it was willing to share more about the financing or increase its offer if Macy’s signed a confidentiality agreement and gave it access to due diligence information, but Macy’s declined. are doing.
Sycamore Partners, a private equity firm focused primarily on retail and consumer investments, is also reportedly in talks to buy the struggling retailer.
Macy’s declined to comment to Yahoo Finance about Sycamore’s offer, while Sycamore Partners did not respond to requests for comment.
Right now, Macy’s appears to be focused on maintaining costs and free cash flow. In January, the company announced plans to lay off about 13% of its workforce and close five stores.
It’s been a turbulent few months for Macy’s, and many believe that going private is inevitable.
According to data from retail insights firm Pass_by, foot traffic to Macy’s stores in 2023 was down 2.49% from the previous year. More worryingly, the drop was even bigger during Black Friday week, the biggest shopping season, and in December.
During the week of Black Friday, Macy’s foot traffic was down 5.24% year-over-year. Traffic in December he decreased by 6.82%.
Despite weak business results, Macy’s valuable portfolio of brick-and-mortar stores remains a takeover target.
The company’s real estate alone is worth $8.5 billion, according to veteran executive and retail expert Jan Kniffen. Others told Yahoo Finance in December that the value could go even higher.
“what [Arkhouse has] It’s over no matter what [has] “It’s brought a lot of attention to Macy’s and in some ways forced everyone to analyze how extremely valuable that property is,” said Oliver Chen, managing director at TD Cowen. He told Yahoo Finance, adding that more suitors could come in light of the new recognition.
So, will Macy’s be the next Sears, or could it be a comeback story?
ComCap managing partner Aaron Bolig told Yahoo Finance that going private could help accelerate Macy’s turnaround by allowing it to reset outside the public market microscope. Told.
In the age of online shopping, “there’s just no room for middle-class people. You…have to be one of the top two or three players,” Borlig said. Ta.
“If you imagine a landscape with a Walmart, a Target, and a Nordstrom, you’ll see that each company has a very distinct customer base that they serve, and Macy’s is stuck a little bit in the middle. We need more Nordstrom than Target,” he added.
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Brooke DiPalma is a senior reporter at Yahoo Finance. Follow her on Twitter @brooke di palma Or email bdipalma@yahoofinance.com.
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