Macy’s sinks most in four years after ending buyout talks

Macy’s Inc.’s shares tumbled on Monday after it said it was ending discussions with two investors to buy out the department store chain, pledging to execute a turnaround plan on its own.

Shares sunk 16%, their biggest decline in four years, after the company said a buyout offer from Arkhouse Management Co. and Brigade Capital Management wasn’t an “actionable proposal” because it didn’t have sufficient financing, the company said in a statement on Monday.

Macy’s decision to officially call off talks is the latest twist in a contentious saga that began with a $5.8 billion buyout offer from the investor group in December. Arkhouse and Brigade raised the bid to $24 in March, and again to $24.80 in June, an offer that Macy’s said wasn’t “compelling.” The financing commitment letters accompanying the revised offer were also insufficient to give the board confidence, said Macy’s, which concluded that further talks were not in its best interest.

Macy’s Chief Executive Officer Tony Spring, who took over in February, said he will execute a turnaround plan on his own as the department store faces inflation-weary consumers who are increasingly shifting their purchases online.

Read More from Bloomberg Intelligence: Macy’s New Buyout Offer From Arkhouse/Brigade Makes Scant Sense

Spring plans to shut stores that haven’t been performing well and revamp ones that have reported relatively better sales. He’s also betting on an expansion of Bluemercury, the high-end skin-care and cosmetics chain, which has had stronger sales than Macy’s and Bloomingdale’s, buoyed by the post-pandemic surge in US demand for beauty products.

Calling off the talks “may eliminate a distraction to the retailer’s plan to restore growth,” Bloomberg Intelligence analyst Mary Ross Gilbert wrote on Monday.

That may not be enough to stem the bleeding across the sector, however. Department stores in the US are going through a period of upheaval as executives try to figure out the most profitable path forward. The owner of Saks Fifth Avenue is acquiring Neiman Marcus Group. And Nordstrom Inc.’s founding family has said it’s considering taking the retailer private.

Shares in competitors Nordstrom fell as much as 5.3% on Monday following the Macy’s announcement, while Kohl’s Corp. declined as much as 3.6%.

A representative for Arkhouse didn’t immediately respond to a request for comment.

More stories like this are available on bloomberg.com

©2024 Bloomberg L.P.