Arkhouse Management and Brigade Capital Management Extend a $5.8 Billion Lifeline to Struggling Macy’s Inc.
In a bold move to rescue the iconic retailer, Arkhouse Management and Brigade Capital Management have proposed a buyout offer of $5.8 billion for Macy’s Inc. This strategic move comes at a time when Macy’s has faced a challenging year, with slumping sales and increasing competition from online retailers.
The buyout offer values Macy’s at $21 per share, a significant premium compared to its recent close at just over $17 per share. Macy’s shares closed at a little over $17 on Friday, representing a 17% decline since the beginning of the year. However, the market responded positively to the news, with a 15% increase in premarket trading on Monday.
Despite the retailer’s efforts to revitalize its brick-and-mortar stores, Macy’s sales have seen a 7% year-over-year decline in the third quarter. The struggle against online competitors and changing consumer preferences has made Macy’s an attractive acquisition target for Arkhouse and Brigade.
Arkhouse, primarily focused on real estate investment, and Brigade Capital, an asset management firm, have expressed their willingness to consider a higher bid after conducting due diligence on Macy’s. This signals their confidence in the potential for a successful turnaround.
Macy’s, with 722 store locations across 43 states, Washington, DC, Puerto Rico, and Guam, has faced challenges for decades. The rise of online giants like Amazon and the dominance of big-box retailers such as Walmart and Target have eroded Macy’s market share. The company’s annual profit and sales forecast was revised in June after a slowdown in customer demand, prompting a candid acknowledgment from Macy’s CEO Jeff Gennette.
“The US consumer, particularly at Macy’s, pulled back more than we anticipated,” Gennette stated on an earnings call. Customers “reallocated” spending to food, essentials, and services, he added.
This acquisition bid follows a similar trend in the retail sector, as evidenced by Kohl’s facing takeover offers in 2022. The challenging economic landscape, marked by volatile interest rates and high inflation, has affected retailers across the board. While online spending proved robust during Black Friday and Cyber Monday, uncertainties remain about the strength of the holiday season, especially after several retailers issued cautious fourth-quarter outlooks.
As Macy’s evaluates the proposal, the retail landscape awaits the potential transformation that Arkhouse Management and Brigade Capital Management could bring to this iconic brand.