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

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

Within a week of one another, the Macy’s and Neiman Marcus department store empires have received buyout offers worth nearly $9 billion combined. The Neiman Marcus proposal came first, with rival Saks Fifth Avenue offering $3 billion last week (Dec. 1). This morning (Dec. 11), markets awoke to Macy’s getting a $5.8 billion take-private bid from a pair of investment firms. News of both offers was first reported by the Wall Street Journal.

The investor groups behind the Macy’s offer are reportedly Brigade Capital Managment, a hedge fund, and Arkhouse Management, a private equity firm that specializes 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 most famous location is its city block–sized store in New York, has been scaling back on 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 didn’t help, given that most department stores are attached to malls, many of which closed their doors to the public during the quarantine era, magnifying their difficulties with in-person shoppers. Neiman Marcus, which also owns the tony Bergdorf Goodman store, declared and emerged from bankruptcy in 2020. Its tie-up with Saks would help the two companies shore each other up amid declining sales.

Store re-directories 

To give a sense of how topsy-turvy things have been for retail in the past couple of decades, there was once the 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 got spun off to an investment firm called NRDC Equity Partners in 2006. NRDC then merged Lord & Taylor with Hudson’s Bay in 2012 after buying the latter in 2008. And in 2017, Hudson’s Bay unsuccessfully approached Macy’s to take it over.

In 2020, Macy’s announced a plan to close 125 stores over three years, though it still has more than 700 locations. It has since begun experimenting with opening smaller stores, planning to launch 30 more by 2025, per Women’s Wear Daily.

Some investors have called for Macy’s to go further. In 2021, Hudsons’s Bay, which bough Saks Fifth Avenue four years before it didn’t buy Macy’s, announced that it had raised $500 million to split off the Saks e-commerce operation from the rest of the business. Later that year, investment firm Jana Partners took a large stake in Macy’s to similarly break out its online business, though it soon cut its position after failing to convince the retailer to go along with that plan.

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