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 …
Finance
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 …
Activists Chart an Uncertain Future for Macy’s
Earlier this year, luxury retailer Saks Fifth Avenue announced plans to spin off its ecommerce business at a $2 billion valuation, backed by a $500 million minority investment from Insight Partners. Now, activist investor Jana Partners wants Macy's to follow a similar path. It claims that such a move could unlock billions of dollars of shareholder value. There are just two problems. First, the Saks ecommerce spinoff looks like a dubious move at best. Second, even if Saks manages to separate its physical and digital businesses without falling …
Don’t Sell the Return of Malls Short
Of the roughly 1,000 malls in the U.S., more than a third are rated C or D, which are grades that indicate low sales productivity, high vacancy rates, poor tenant quality, and other weaknesses. Once the retail apocalypse gained steam around 2015, it quickly became clear that most of these properties wouldn’t be viable as malls by 2030. The Covid-19 pandemic dealt malls another blow last year. Public health orders forced most U.S. malls to close for months and ratcheted up the financial pressure on many of their tenants. Moreover, during 2020 …
A Retail Health Check
"There are three kinds of lies," Mark Twain famously wrote over a century ago. "Lies, damned lies, and statistics." The conventional media reporting on the U.S. Census Bureau's monthly retail sales reports epitomizes how misused statistics can become no better than lies. The recently released July retail sales report is a prime example. Fake News After the report came out on August 16, media outlets ran with blaring headlines. To give just a few examples, CNBC talked about a "worse-than-expected" drop of 1.1 percent, while CNN called the …
Why Omnichannel Is So Hard
Over the past decade, "omnichannel" has become one of the most common buzzwords in retail. Retail executives, industry consultants, and analysts all agree on the importance of integrating the brick-and-mortar and online channels so that customers can move seamlessly between them. Yet while there's consensus about what retailers should do, adapting to this new way of doing business isn't simple. Of course, some prominent retailers like Target have made omnichannel look easy. Target got a late start, having made a boneheaded move to outsource …
Don’t Lose Your Customers Over Credit Card Fees
It all started with gasoline stations and small businesses-- you remember, the percent added to sales purchases that is passed on from the retailer to the customer. A $36 mug is assessed a three percent charge if paying by credit card but no fee if you pay cash or use a debit card. Since Covid-19, I have experienced an additional service fee when dining out and Covid-19 surcharges for restaurants and hotels… and this trend is expanding into retail. Pass-along Fees The policy of passing along service fees to the customer may not translate well …
ABG’S Chief Spinmeister
I thought I was done with my recent assessment of Authentic Brands Group licensing model as well as their SPARC deal with Simon Properties. I have already commented on the idiocy of placing dying ABG brands into dying malls (Simon Properties) to try to prop up a dying JC Penney brand as the anchor in many of their shopping center locations. In fact, I summed up my predicted outcome: “Here is what failure looks like: Acquire a bunch of once-cool brands on the cheap, license third parties to run them, further license them out to a mall developer …