Macy’s, Neiman Marcus both offered multibillion-dollar buyouts

There are some Christmas shopping lists out there with gifts so big they couldn’t fit under the tree at Rockefeller Center.

Within a week of each other, the Macy’s and Neiman Marcus department stores received buyout offers worth nearly $9 billion combined. The Neiman Marcus proposal came first, with rival Saks Fifth Avenue offering $3 billion last week (December 1). This morning (Dec. 11), markets woke up to Macy’s getting a $5.8 billion private bid from a pair of investment firms. News of both offers was first report by the Wall Street Journal.

The investor groups behind the Macy’s offer are believed to be Brigade Capital Management, a hedge fund, and Arkhouse Management, a private equity firm specializing in real estate. Macy’s, Brigade and Arkhouse all declined to comment. Neither Neiman Marcus Group nor Saks Fifth Avenue responded to requests for comment.

Macy’s, whose best-known location is its city-block-sized store in New York, has scaled back its brick-and-mortar footprint in the face of long-term, hurricane-strength headwinds for department stores: declining consumer interest on the one hand and growing e-commerce competition on the other.

The covid-19 pandemic has not helped as most department stores are attached to malls, many of which closed their doors to the public during the quarantine era, increased their problems with personal shoppers. Neiman Marcus, which also owns the tony Bergdorf Goodman store, declared and came out of bankruptcy in 2020. Its association with Saks would help the two companies support each other amid declining sales.

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To give you an idea of ​​how exciting things have been for retail over the past few decades, there was once a chance that Macy’s could have become its own corporate parent, Back to the Future –style. In 2005, Macy’s predecessor Federated Stores acquired the May Department Stores chain. May owned Lord & Taylor, which was spun off in 2006 to an investment firm called NRDC Equity Partners. NRDC then merged Lord & Taylor with Hudson’s Bay in 2012 after purchasing the latter in 2008. And in 2017, Hudson’s Bay unsuccessfully approached Macy’s to take it over.

In 2020, Macy’s announced that a plans to close 125 stores in three years, although it still has more than 700 locations. It has since begun experimenting with opening up smaller shopsplans to launch 30 more by 2025, per Women’s Wear Daily.

Some investors called for Macy’s to go further. In 2021, Hudsons’s Bay, which Saks Fifth Avenue four years before that do not have shop macy’s, announced that it had raised $500 million to separate the Saks e-commerce operations from the rest of the business. Later that year, the investment firm Jana Partners took a big part in Macy’s to similarly break out its online business, though it soon cut his position after failing to convince the retailer to go along with that plan.

Macy’s shares rose about 20% in Monday trading.