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Macy's (M) Mulls Over $5.8 Billion Buyout Proposal Rumors
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Macy's (M - Free Report) has been making smart moves to enhance customer shopping experience. The company’s omnichannel capabilities, including digital efforts and Polaris strategy, appear quite encouraging. In recent developments, this omnichannel retailer has received a buyout proposal from real estate investor Arkhouse Management and asset manager Brigade Capital Management, per the media reports. This deal is valued at $5.8 billion, according to media sources.
Sources say that the offer, which was submitted on Dec 1, 2023, values the company’s shares at $21 per share. We note that the offer price reflects a 32.4% premium to M's closing at $15.86 per share on Nov 30. However, Macy’s has declined to comment on the same.
According to sources, the group offering the proposal holds a huge stake in Macy's via Arkhouse-managed funds and has also discussed with the company, whose board has been mulling the offer. The department store chain's shares have risen 50.4% over the past three months compared with the industry’s 22.2% growth.
Macy’s exited the third quarter of fiscal 2023 with a long-term debt of $2,997 million. Starting August 2021, the company has taken a host of aggressive measures to pay down its long-term debt of more than $1.8 billion. As a result, it is currently benefiting from an improved leverage ratio and an attractive debt maturity schedule. In addition, the company had cash and cash equivalents of $364 million at the end of the reported quarter.
Image Source: Zacks Investment Research
During the nine months of fiscal 2023, Macy’s generated cash flow from operating activities of $158 million. During the same period, the company repurchased about 1.4 million shares for $25 million and paid $135 million in dividends.
What Else?
Macy’s has been strengthening its omnichannel capabilities with investments in online shopping experiences, data and analytics, technology infrastructure as well as better fulfillment capabilities. The company has undertaken initiatives to expand market share and better engage with customers. Its launch of Macy’s Marketplace includes products in a wide range of categories, such as pets, home, kids, baby and maternity, beauty and health, and toys and electronics. Management plans to expand Toys “R” Us to every Macy’s location. M is repositioning its physical store footprint to better serve customers and boost sales.
Macy's Polaris Strategy is believed to adapt better to the evolving retail ecosystem. This includes strengthening customer relationships, expanding assortments, accelerating digital growth, optimizing store portfolio and reducing costs. Moreover, the company’s expanded Star Rewards Loyalty program, which was initiated in 2018, has been aiding better customer engagement. This was evident in the third quarter of fiscal 2023.
Star Rewards program members made up roughly 72% of the total Macy's brand-owned-plus-licensed sales. Management informed that 4 million active customers shopped the Bloomingdale’s brand and about 683,000 active customers shopped the Bluemercury brand on a trailing 12-month basis.
This currently Zacks Rank #3 (Hold) company is ramping up its small-format store initiative, with openings across Macy's and Bloomie's locations. These stores, about one-fifth the size of its larger counterparts, are designed to provide customers with a premium shopping experience in high-traffic areas. Shoppers can expect to find a mix of Macy's private brands and popular market brands in these smaller outlets.
Key Picks
We have highlighted three better-ranked stocks, namely Abercrombie & Fitch (ANF - Free Report) , American Eagle Outfitters (AEO - Free Report) and Gap (GPS - Free Report) .
The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial year sales implies growth of 13.3% year over year. ANF delivered an earnings surprise of 713% in the last reported quarter.
Gap, a fashion retailer of apparel and accessories, currently sports a Zacks Rank of 1. The company has a trailing four-quarter earnings surprise of 137.9%, on average.
The Zacks Consensus Estimate for Gap’s current financial year earnings per share (EPS) indicates growth of 387.5% year over year.
American Eagle Outfitters, a retailer of casual apparel, accessories and footwear, currently has a Zacks Rank #2 (Buy). AEO delivered a trailing four-quarter average earnings surprise of 23%.
The Zacks Consensus Estimate for American Eagle Outfitters’ current financial year sales and EPS implies growth of 4% and 39.2%, respectively, from that reported a year ago.
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Macy's (M) Mulls Over $5.8 Billion Buyout Proposal Rumors
Macy's (M - Free Report) has been making smart moves to enhance customer shopping experience. The company’s omnichannel capabilities, including digital efforts and Polaris strategy, appear quite encouraging. In recent developments, this omnichannel retailer has received a buyout proposal from real estate investor Arkhouse Management and asset manager Brigade Capital Management, per the media reports. This deal is valued at $5.8 billion, according to media sources.
Sources say that the offer, which was submitted on Dec 1, 2023, values the company’s shares at $21 per share. We note that the offer price reflects a 32.4% premium to M's closing at $15.86 per share on Nov 30. However, Macy’s has declined to comment on the same.
According to sources, the group offering the proposal holds a huge stake in Macy's via Arkhouse-managed funds and has also discussed with the company, whose board has been mulling the offer. The department store chain's shares have risen 50.4% over the past three months compared with the industry’s 22.2% growth.
Macy’s exited the third quarter of fiscal 2023 with a long-term debt of $2,997 million. Starting August 2021, the company has taken a host of aggressive measures to pay down its long-term debt of more than $1.8 billion. As a result, it is currently benefiting from an improved leverage ratio and an attractive debt maturity schedule. In addition, the company had cash and cash equivalents of $364 million at the end of the reported quarter.
Image Source: Zacks Investment Research
During the nine months of fiscal 2023, Macy’s generated cash flow from operating activities of $158 million. During the same period, the company repurchased about 1.4 million shares for $25 million and paid $135 million in dividends.
What Else?
Macy’s has been strengthening its omnichannel capabilities with investments in online shopping experiences, data and analytics, technology infrastructure as well as better fulfillment capabilities. The company has undertaken initiatives to expand market share and better engage with customers. Its launch of Macy’s Marketplace includes products in a wide range of categories, such as pets, home, kids, baby and maternity, beauty and health, and toys and electronics. Management plans to expand Toys “R” Us to every Macy’s location. M is repositioning its physical store footprint to better serve customers and boost sales.
Macy's Polaris Strategy is believed to adapt better to the evolving retail ecosystem. This includes strengthening customer relationships, expanding assortments, accelerating digital growth, optimizing store portfolio and reducing costs. Moreover, the company’s expanded Star Rewards Loyalty program, which was initiated in 2018, has been aiding better customer engagement. This was evident in the third quarter of fiscal 2023.
Star Rewards program members made up roughly 72% of the total Macy's brand-owned-plus-licensed sales. Management informed that 4 million active customers shopped the Bloomingdale’s brand and about 683,000 active customers shopped the Bluemercury brand on a trailing 12-month basis.
This currently Zacks Rank #3 (Hold) company is ramping up its small-format store initiative, with openings across Macy's and Bloomie's locations. These stores, about one-fifth the size of its larger counterparts, are designed to provide customers with a premium shopping experience in high-traffic areas. Shoppers can expect to find a mix of Macy's private brands and popular market brands in these smaller outlets.
Key Picks
We have highlighted three better-ranked stocks, namely Abercrombie & Fitch (ANF - Free Report) , American Eagle Outfitters (AEO - Free Report) and Gap (GPS - Free Report) .
Abercrombie & Fitch, a leading casual apparel retailer, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial year sales implies growth of 13.3% year over year. ANF delivered an earnings surprise of 713% in the last reported quarter.
Gap, a fashion retailer of apparel and accessories, currently sports a Zacks Rank of 1. The company has a trailing four-quarter earnings surprise of 137.9%, on average.
The Zacks Consensus Estimate for Gap’s current financial year earnings per share (EPS) indicates growth of 387.5% year over year.
American Eagle Outfitters, a retailer of casual apparel, accessories and footwear, currently has a Zacks Rank #2 (Buy). AEO delivered a trailing four-quarter average earnings surprise of 23%.
The Zacks Consensus Estimate for American Eagle Outfitters’ current financial year sales and EPS implies growth of 4% and 39.2%, respectively, from that reported a year ago.