Macy's, Inc. (M) on Monday issued a statement in response to Barington Capital Group, L.P.'s presentation recommending the former make changes in its capital allocation strategy and consider other structural actions to improve shareholder value.
The presentation, made along with Thor Equities LLC and their respective affiliates, pointed out that Macy's shares have suffered in the past decade due to long-term challenges in the department store sector and previous management missteps.
Barington and Thor stated their concern that Macy's cash could be misallocated in the future through wasteful and ineffective capital expenditure programs. They further stressed that Macy's board lacks the knowledge, vision and desire to extract maximum value from its real estate assets.
They advised Macy's to cut capital expenditures to 1.5 percent-2 percent of total sales, buyback a minimum of $2-$3 billion in stock over the next three years, create a separate internal real estate subsidiary, and evaluate strategic alternatives for the company's higher growth Bloomingdale's and Bluemercury luxury operations.
The New York City-based company responded by assuring its commitment towards delivering sustainable, profitable growth and driving shareholder value.
Further, Macy's stressed that its new strategic plan, called "A Bold New Chapter," which involves closing stores with low productivity, as well as cost reductions, will result in consistent revenue growth and profit improvements.
Currently, Macy's stock is trading at $16.83, up 2.46 percent on the New York Stock Exchange.
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