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Macy’s needs to renew its creativity by putting exciting products in stores and holding engaging events to lure younger generations back, according to activist investor Barington Capital.
Those are two of the many changes the activist investor says are needed to turn around Macy’s, once a well-established department store but struggling to keep up with rapid industry changes and competition.
Jim Mitarotonda, CEO of Barrington Capital Group, has made it clear that he trusts Macy’s senior leadership, saying there is “no reason” why the company should not be able to improve its business operations. While Macy’s CEO Tony Spring and CFO Adrian Mitchell “understand the retail industry well,” Mitarotonda told FOX Business that “the thinking has to change.”
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Barington Capital, Thor Equities LLC and their affiliates, Macy’s shareholders, recommended that the retailer make changes to its capital allocation strategy and consider other structural actions to improve shareholder value.
Mitarotonda said the company needs to bring in “high-quality salespeople.” Spring wasn’t on the sales side when he headed to Bloomingdales, so it’s important that he bring a well-rounded team with people with strong merchandising and fashion skills, according to Mitarotonda.
A man holds a Macy’s bag in Manhattan, New York, on July 5, 2024. (Beata Zawrzel/NurPhoto via Getty Images/Getty Images)
“If the product isn’t fun, they’re fun [customers] I will not go to the store or go to the Macy’s website. It just won’t happen. So it’s about the brand and creating exciting events to drive people into the store,” Mitarotonda said.
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The company should also develop its digital marketing strategy, which includes powerful influencers. Appealing to younger consumers is important in helping the company tap into the larger retail channels available to the US consumer today, according to Mitarotonda.
“Young people go to TikTok. They’ll go to Instagram, they’ll go to Threads, they’ll go to all these other things that adults just don’t do,” he said. “See [Macy’s] you need to think about that. They need to rekindle the excitement that was there a long time ago.”
People cross the street outside Macy’s Herald Square store on December 17, 2023 in New York City. (Kena Betancur/VIEWpress) / Getty Images)
The manager of Barington Capital praised Dillard’s, another department store, for its strong performance, highlighting its success in both sales and business development, which led to a significant increase in margins.
In the past year, Macy’s shares have fallen more than 16%. During that same period, Dillard’s stock rose more than 11%.
Shoppers exit a Macy’s store in Las Vegas, Nevada, on Nov. 7, 2021. (Bridget Bennett/Bloomberg via Getty Images/Getty Images)
Mitarotonda also suggested that Macy’s should separate its operating company from its real estate business, meaning that Macy’s should create a separate real estate company that manages the property, the operating business that pays for the real estate company.
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This will not “harm the retail business at all,” Mitarotonda said. Instead, he said, “it will make them even better.”
Mitarotonda said this will create transparency, which will allow shareholders and the financial community to clearly see the income and expenses of each part of the company. Additionally, by having a real estate professional manage the property side, rather than a broker, the company believes it will help increase the value of the properties.
The company also proposed the establishment of the company’s luxury brands, Bloomingdale’s and Bluemercury, which continue to generate good retail sales.
A shopper puts on shoes at the Macy’s store in Herald Square on Dec. 23, 2023, New York City. (Photos by Jeenah Moon/Getty Images)
Mitarotonda said that if Bloomingdales and Bluemercury trade outside of Macy’s, they will trade at a higher rate than their parent company.
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“It is important that the board of directors and the management team look at how to increase the profit for the company’s owners and the shareholders who see it,” he said.
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