Last fall, investment fund Jana Partners launched an activist campaign at Macy's. The fund aimed to double Macy's share price by separating the department store's growing ecommerce business from its physical stores. Jana Partners portfolio manager Scott Ostfeld estimated that Macy's digital operations could be worth $16.8 billion: far more than the entire company's market value at the time. Macy's management took this suggestion seriously. Rather than rebuffing Jana Partners, CEO Jeff Gennette told investors in November that Macy's had hired …
Finance
Separate Is Not Equal
In a world where ecommerce has become mainstream and retailers raced to build unified commerce business models, some brands are starting to consider returning to multichannel structures. While this may present an opportunity to unlock value for stockholders, it is the opposite of what consumers are looking for in retail. Unified commerce is a total ecosystem of seamless, frictionless processes that put the consumer first. Today it is no longer about getting the right product at the right price, it is about getting the right product, at the …
Maybe It’s Not Inflation, but an Economic Recalibration
What if the current price increases American consumers are experiencing are not temporary, caused by inflationary pressures, but instead are signs of a once every 70- to 100-year massive economic recalibration? Free Range Pricing We saw this happen in the last century. It started with a gasoline crisis in 1973, and it continued into the 1980s. During that period, prices for nearly everything soared and then most stayed at higher levels creating an entirely new consumer reality. Prices were rising so fast that many retailers for a time did …
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Looking Back: A Great Holiday Season for Consumer Spending
The numbers are in, and 2021 consumer holiday spending did not disappoint. In fact, 2021 holiday sales knocked many analysts’ projections out of the water. U.S. consumer spending on credit and debit cards from the week of Thanksgiving through the week of Christmas 2021 was up a mammoth 22 percent according to Commerce Signals Consumer Spend Tracker. As to be expected, some sectors did better than others. The categories that saw skyrocketing sales during the 2021 holiday season were those that customers missed out on the most during …
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Kohl’s Under Pressure
A year ago, Kohl's beat back a campaign by four activist investment funds to unseat its board and shake up its operations. The activists settled for smaller changes at the board level: adding three new directors, creating a standing finance committee to oversee capital allocation, and authorizing a $2 billion share repurchase program. The department store didn't get a very long reprieve, though. In early December, Engine Capital called for Kohl's to either spin off its ecommerce business as a separate entity or sell the whole company. And in …
BNPL Is No Panacea for Retailers
Over the past two years, buy now pay later (BNPL) services have rapidly gone mainstream in the United States. As recently as 2019, U.S. BNPL payment volume totaled just $3 billion. That rose to an estimated $55 billion last year. Many prognosticators expect this momentum to continue for the foreseeable future. BNPL has become a go-to payment method for younger consumers (particularly millennials and Gen Z) during the Covid-19 pandemic. Merchants have eagerly partnered with BNPL platforms to appeal to these cohorts. BNPL has become especially …
What Is Macy’s Thinking?
Just as Macy’s announced impressive earnings, which pushed its stock price up 21 percent, a boardroom drama intensified, spurred by an activist investor. The proposal on the table seems astonishing: Split Macy’s multibillion-dollar ecommerce business from its 600-store brick-and-mortar business to release “trapped” shareholder value. This demand was delivered in a letter to the board by Jana Partners after it acquired an unknown stake in the company. Bifurcated Business The idea of Macy’s spinning off their ecommerce business shows how …
Are We Moving the ESG Needle Yet?
Recently the CEO of a think tank heralded the outcomes of the Glasgow Summit “The roadmap and momentum are there; so, the big issue is now acceleration.” While another observer pinpointed the shortage of money needed to effectively meet the challenges of global warming. The money is not only needed to offset the damages and growing threats to smaller nations, but also to fund new enterprises and innovations which to date have been largely focused on mitigation. Both observers have rightly targeted the critical issues. What’s next is identifying …