Joe Sitt, Activist Investors Intrigued by Macy’s Real Estate

Another activist investor group is taking aim at Macy’s and its real estate portfolio — but this time the pressure is coming from a major name in New York real estate.

Joseph Sitt’s Thor Equities and Barington Capital Group pitched a plan to lift Macy’s sagging stock, Bloomberg reported. Among Thor and Barington’s ideas include forming a separate real estate unit and spinning off the retailer’s top chains, Bloomingdale’s and Bluemercury, according to a presentation.

The investors, which are seeking seats on the Macy’s board, called on the retailer to cut spending to between 1.5 percent and 2 percent of sales and buy back up to $3 billion in stock in the next three years. It’s unclear what stake the activists have in the company.

Sitt told the outlet it would make sense for Macy’s to rent part of its flagship store in Herald Square. He claimed the company doesn’t need that large of a building and that it’s prompting bad decisions.

“The bottom line is there’s so much value to be tapped in the business and you have folks that aren’t thinking about the bigger picture to unlock all the value,” Sitt told Bloomberg.

The investors estimate the Macy’s real estate portfolio to be worth as much as $9 billion. They’re pitching Macy’s to form a real estate subsidiary to control the company’s owned and leased properties, to which the retailer would pay rent.

Thor and Barington drew comparisons to the turnaround at Dillard’s, though there’s no apple-to-apple comparison there, according to Bloomberg analyst Mary Ross Gilbert. Dillard’s is a smaller department store chain and has moved away from discounts, which Macy’s may not be willing to do.

Macy’s in a statement expressed confidence in its strategy but said it was looking “forward to engaging” with the investors. The retailer plans to pursue its strategy iof shutting down hundreds of underperforming stores, cutting costs and opening more locations for Bloomingdale’s and Bluemercury.

Activist investors previously tried to make waves at Macy’s while focusing on the untapped potential of the company’s real estate. Arkhouse Management and Brigade Capital Management launched a takeover bid with real estate assets at the forefront; talks with those activist investors ended in July.

Macy’s is set to announce its third-quarter earnings on Wednesday. The stock price closed at $16.72 on Monday and is down 15.4 percent year-to-date.

— Holden Walter-Warner