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Macy’s rejects $5.8 billion offer to take iconic department store private, prepares to cut costs continual struggle.
The companies will pay $21 per outstanding share to take the company private, according to an “unsolicited proposal” filed last month by investment firm Arkhouse Management and its partner Brigade Capital Management.Financial firms have set their sights on the storied retailer, believing that with its Multi-billion dollar real estate portfolioOne analyst told CBS MoneyWatch that the company is undervalued in the stock market.
Macy’s board members were down on the proposal because it “lacked[ed] The apparel giant said in a statement on Sunday that the value was compelling. The company also expressed concerns about the companies’ “ability to fund their proposed transactions.”
Industry-wide downturn
The offer and rejection come as Macy’s grapples with an industry-wide sales slump caused by increased competition from online retailers.this company reports Last fiscal year, the company made profits of $1.2 billion on revenue of $24.4 billion, down from profits of $1.6 billion on revenue of $24.5 billion in 2021.
More broadly, department store sales fell 1.5% in the first seven months of 2023 compared with the previous year, trade publication Modern Retail reported, citing U.S. Census data.
retail industry Keep fighting Consumers are abandoning malls in favor of online shopping, leading to the closure of stores such as Payless and Toys R Us and tens of thousands of layoffs.
Over the past year and a half, 2,000 retail stores have closed, with companies such as Foot Locker and Walmart closing stores to save money.That A trickle will turn into a flood Wall Street analysts say over the next five years.
Years of chronic underperformance have weighed on Macy’s stock price, leaving the company relatively Attractive acquisition target.
In the absence of a deal, Macy’s is pursuing a variety of strategies to boost its valuation. The retailer said it would lay off 3.5% of its workforce, or about 2,350 employees, this week in addition to closing five stores. The company told The Associated Press last week that the cost-cutting measures are designed to allow the retailer to “deploy new strategies to meet changing consumer and market needs.”
The shift in strategy comes as the popularity of department stores and other brick-and-mortar retailers wanes as consumers embrace online shopping. E-commerce sales increased $244.2 billion, or 43%, in 2020 from the previous year, according to the U.S. Census Bureau’s Annual Retail Trade Survey (ARTS).
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