Jana Partners LLC, an activist investment firm founded by hedge fund executive Barry Rosenstein, has taken a stake in Macy’s Inc. M and has called on the company’s leadership to spin off its e-commerce operations.
What Happened: The Wall Street Journal, citing unnamed “people familiar with the matter,” said Jana sent a letter to the company’s board calling on the department store chain to separate from its online unit, which generates approximately $8 billion in revenue. Jana argued that a separate e-commerce business would be worth a multiple of Macy’s current market value, which is approximately $7 billion.
Neither Macy’s nor Jana publicly commented on the story, which did not detail the parameters of Jana’s acquired stake.
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What's Next: Jana’s advice appears to contradict the observations offered by Macy’s CEO Jeff Gennette during a conference last month that noted nearly 70% of Macy’s customers shop through multiple platforms and aren't focused solely on brick-and-mortar or e-commerce.
“We just believe that stores and mobile and our website are just stronger together than anyone is alone,” he said, adding that the company’s digital sales are expected to reach $10 billion within three years.
M Price Action: Whether Jana can redirect the company’s sales strategy remains to be seen, but news of its intrusion into the corporate planning process helped animate Macy’s stock, which closed on Thursday at $23.11, up 3% after the Jana news broke, and is currently at $24.08, up 4.15%.
Photo: Mike Mozart / Flickr Creative Commons.
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