Jana Partners in October said that Macy’s could double its valuation with a spinoff. But Macy’s, which also owns Bloomingdale’s, said Tuesday the costs of separating its online arm from its brick-and-mortar division would be too high.
Macy’s said its plan to remain one company and expand its digital business, private brands and small, off-mall stores is a stronger path forward than a split.
“In every alternative scenario we considered, the execution risk for the business and our customers was too high,” Macy’s CEO Jeffrey Gennette said on a call with analysts. “Macy’s has a stronger future as a fully integrated business.”
The announcement came as Macy’s reported strong quarterly earnings.
Macy’s said sales at stores open for at least a year increased 28.3% during the quarter compared to the same stretch last year, when Covid-19 vaccines had not yet rolled out and many shoppers were avoiding stores.
Wall Street has targeted Macy’s and Kohl’s because the chains have lagged behind other retailers in recent years.
But Macy’s and Kohl’s are betting that their own strategies, not activists on Wall Street, give them the best chance to fend off retail competitors and avoid the same fate as vanished department stores.