Retailer Macy’s Inc M has been one of the best-performing sector stocks over the last year, with shares up 285%. The stock has been a popular target for activist investors over the year pushing for the company to unlock value.
An activist investor is calling for Macy’s to get into two high growth areas.
What Happened: Activist investor NuOrion Advisors is calling for Macy’s to unlock shareholder value with electric vehicle sales partnerships and growth of cryptocurrencies. NuOrion owns shares of Macy’s.
“Macy’s should form partnerships with EV car companies to showcase their products on the ground floor of Macy’s 100 top landmark stores,” NuOrion said in a letter sent to Macy’s.
The letter specifically mentions Tesla Inc TSLA, Lucid Group LCID and Rivian Automotive RIVN as electric vehicle companies that Macy’s could feature on a ground floor showroom of its top 100 “landmark stores” like Herald Square, Marshall Field and Union Square.
Unlike the traditional automakers that have hundreds of dealerships across the country, electric vehicle companies have operated with more of a direct-to-consumer business model and a limited number of showrooms.
NuOrion also said Macy’s could build an electric vehicle charging network in its “massive parking footprint” at locations.
“We believe that direct association with EV companies will drive enormous traffic to Macy’s stores.”
NuOrion is also pushing for Macy’s to partner with cryptocurrency platforms to allow digital payments in stores.
“Macy’s can be one of the first major retailers to accept crypto, joining companies like Starbucks and Whole Foods.”
Related Link: Cramer Says Macy's Could Reach $30 If This Happens
Why It’s Important: NuOrion said it believes Macy’s shares could be worth $75 per share if the company pursues the items laid out by the investor.
“We believe that Macy’s has the digital footprint and landmark stores needed to be a world-class new age retailer,” NuOrion said.
An example cited by the activist investor is Saks Fifth Avenue selling a $500-million stake in Saks.com, which values its e-commerce business at $2 billion. The deal valued the e-commerce unit at 2x sales and an IPO could see Saks valued at $6 billion.
Macy’s has a market capitalization of over $9 billion and is valued at 0.6x its 2021 estimated sales of $24 billion, according to the letter.
The letter from NuOrion follows activist investor Jana Partners taking a stake in Macy’s and calling for the company to spin off its ecommerce business. Jana argued that the e-commerce business of Macy’s could be worth $7 billion as a standalone business.
Increased activist pressure could see Macy’s make changes to increase shareholder value.
Macy’s reports third-quarter financial results on Nov. 18 and could issue comments on activity.
M Price Action: Macy's shares gained 3.55% Thursday, closing at $30.92. Shares are up 165% year-to-date.
Disclosure: Author is long LCID shares.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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