Macy's is grappling with how to make its e-commerce business a standalone company without losing customers who rely on its department stores to pick up or return items they bought online, according to people familiar with the deliberations.
The 163-year-old retailer said last month it had asked consulting firm AlixPartners to review its business structure after Jana Partners urged it to separate its e-commerce arm.
The activist hedge fund said in October the e-commerce business could be worth $14 billion on its own, more than Macy's entire market capitalisation of about $8bn.
AlixPartners also advised HBC, the owner of Saks Fifth Avenue, on the separation earlier this year of its e-commerce business from its department stores.
Macy's views a similar separation as more challenging because of its large store footprint and its online customers' reliance on it, the sources said.
Macy's has close to 800 stores. It has said its online sales are two to three times higher per capita in regions where the stores are located, because of the convenience for customers of picking up and returning items at the stores.
Saks, on the other hand, has only about 40 stores, and the privately held company's e-commerce business generates annual revenue of less than $1bn. That is a fraction of Macy's e-commerce revenue, which is set to exceed $8bn this year, according to Morningstar analysts.
A separated Macy's online business will need to have extensive commercial agreements with the company holding the department stores. They would have to govern everything from merchandise distribution and storage to promotions and marketing, in order to provide Macy's customers a seamless experience in-store and online, the sources said.
Such agreements will need to withstand the test of time as the company holding the department stores downsizes further, shutting down locations on which the e-commerce business relies, the sources added.
The introduction of numerous service agreements to compensate stores would likely lower profitability
Cowen analysts
"The introduction of numerous service agreements to compensate stores would likely lower profitability," Cowen analysts said in a note last month.
The duplication of functions now housed under one roof, such as logistics and administration, would add to the costs, the sources said.
Macy's has been going in the opposite direction with its "Polaris" strategy launched last year, which envisions $1.5bn in annual cost reductions through the synergies of brick-and-mortar retail with e-commerce by the end of 2022.
In a letter to Macy's in October, Jana suggested that a benefit of separation could be a cash infusion in the online business that would help hire top talent and invest in new technology, the sources said. It pointed to the case of Saks, which attracted a $500 million investment from private equity firm Insight Venture Partners at a $2bn valuation for its online business.
The Macy's review is also exploring this possibility, according to the sources.
"Our objective is to light a fire under this company that has an incredible brand," said Guy Phillips, managing member at NuOrion Advisors, a Macy's investor that is also pushing the company to make changes.
Macy's has not provided a timeline for completion of the business review.
While Jana applauded Macy's decision to launch the review, it has not ruled out a challenge to the company's board. It will have the opportunity to nominate directors early next year should it decide the company has not made enough progress.
This is not the first time Macy's faces calls for a break-up. It fended off demands from activist hedge fund Starboard Value six years ago to sell its real estate and then lease it back for its stores. It has subsequently trimmed its property portfolio and entered into a partnership with Brookfield Asset Management to cash in on some of it.
Department stores have enjoyed a sales rebound in recent months as Americans splurge on perfumes, dresses and formal wear following Covid-19 pandemic lockdowns. But their profitability has suffered amid shipping logjams, labour shortages and inflationary pressure.
Macy's has fared much better than most retailers thanks to its ability to pass on some of the additional costs to customers. Its shares are up 143 per cent year-to-date, compared with an 18 per cent rise in the S&P500 retailing index.
Macy's said last month it expects a 1 per cent rise in gross margins from pre-pandemic 2019 levels. It also raised its full-year sales and profit outlook and expects full-year net sales of $24.12bn to $24.28bn, compared with $23.55bn to $23.95bn previously.
if you go
The flights
Air France offer flights from Dubai and Abu Dhabi to Cayenne, connecting in Paris from Dh7,300.
The tour
Cox & Kings (coxandkings.com) has a 14-night Hidden Guianas tour of Guyana, Suriname and French Guiana. It includes accommodation, domestic flights, transfers, a local tour manager and guided sightseeing. Contact for price.
Abu Dhabi Equestrian Club race card
5pm: Abu Dhabi Fillies Classic (PA) Prestige; Dh110,000; 1,400m
5.30pm: Abu Dhabi Colts Classic (PA) Prestige; Dh110,000; 1,400m
6pm: Maiden (PA); Dh80,000; 1,600m
6.30pm: Abu Dhabi Championship (PA) Listed; Dh180,000; 1,600m
7pm: Wathba Stallions Cup (PA) Handicap; Dh70,000; 2,200m
7.30pm: Handicap (PA); Dh100,000; 2,400m
House-hunting
Top 10 locations for inquiries from US house hunters, according to Rightmove
- Edinburgh, Scotland
- Westminster, London
- Camden, London
- Glasgow, Scotland
- Islington, London
- Kensington and Chelsea, London
- Highlands, Scotland
- Argyll and Bute, Scotland
- Fife, Scotland
- Tower Hamlets, London
Thor%3A%20Love%20and%20Thunder%20
%3Cp%3E%3Cstrong%3EDirector%3A%3C%2Fstrong%3E%20Taika%20Waititi%C2%A0%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStars%3A%3C%2Fstrong%3E%20Chris%20Hemsworth%2C%20Natalie%20Portman%2C%20Christian%20Bale%2C%20Russell%20Crowe%2C%20Tessa%20Thompson%2C%20Taika%20Waititi%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%204%2F5%3C%2Fp%3E%0A
SPECS
%3Cp%3EEngine%3A%20Twin-turbocharged%204-litre%20V8%3Cbr%3EPower%3A%20625%20bhp%3Cbr%3ETorque%3A%20630Nm%3Cbr%3EOn%20sale%3A%20Now%3Cbr%3EPrice%3A%20From%20Dh974%2C011%3C%2Fp%3E%0A
The Bio
Amal likes watching Japanese animation movies and Manga - her favourite is The Ancient Magus Bride
She is the eldest of 11 children, and has four brothers and six sisters.
Her dream is to meet with all of her friends online from around the world who supported her work throughout the years
Her favourite meal is pizza and stuffed vine leaves
She ams to improve her English and learn Japanese, which many animated programmes originate in
Pakistan v New Zealand Test series
Pakistan: Sarfraz (c), Hafeez, Imam, Azhar, Sohail, Shafiq, Azam, Saad, Yasir, Asif, Abbas, Hassan, Afridi, Ashraf, Hamza
New Zealand: Williamson (c), Blundell, Boult, De Grandhomme, Henry, Latham, Nicholls, Ajaz, Raval, Sodhi, Somerville, Southee, Taylor, Wagner
Umpires: Bruce Oxerford (AUS) and Ian Gould (ENG); TV umpire: Paul Reiffel (AUS); Match referee: David Boon (AUS)
Tickets and schedule: Entry is free for all spectators. Gates open at 9am. Play commences at 10am
Global state-owned investor ranking by size
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Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Temple numbers
Expected completion: 2022
Height: 24 meters
Ground floor banquet hall: 370 square metres to accommodate about 750 people
Ground floor multipurpose hall: 92 square metres for up to 200 people
First floor main Prayer Hall: 465 square metres to hold 1,500 people at a time
First floor terrace areas: 2,30 square metres
Temple will be spread over 6,900 square metres
Structure includes two basements, ground and first floor
UAE currency: the story behind the money in your pockets
The biog
Favourite film: The Notebook
Favourite book: What I know for sure by Oprah Winfrey
Favourite quote: “Social equality is the only basis of human happiness” Nelson Madela. Hometown: Emmen, The Netherlands
Favourite activities: Walking on the beach, eating at restaurants and spending time with friends
Job: Founder and Managing Director of Mawaheb from Beautiful Peopl
Ziina users can donate to relief efforts in Beirut
Ziina users will be able to use the app to help relief efforts in Beirut, which has been left reeling after an August blast caused an estimated $15 billion in damage and left thousands homeless. Ziina has partnered with the United Nations High Commissioner for Refugees to raise money for the Lebanese capital, co-founder Faisal Toukan says. “As of October 1, the UNHCR has the first certified badge on Ziina and is automatically part of user's top friends' list during this campaign. Users can now donate any amount to the Beirut relief with two clicks. The money raised will go towards rebuilding houses for the families that were impacted by the explosion.”
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
Safety 'top priority' for rival hyperloop company
The chief operating officer of Hyperloop Transportation Technologies, Andres de Leon, said his company's hyperloop technology is “ready” and safe.
He said the company prioritised safety throughout its development and, last year, Munich Re, one of the world's largest reinsurance companies, announced it was ready to insure their technology.
“Our levitation, propulsion, and vacuum technology have all been developed [...] over several decades and have been deployed and tested at full scale,” he said in a statement to The National.
“Only once the system has been certified and approved will it move people,” he said.
HyperloopTT has begun designing and engineering processes for its Abu Dhabi projects and hopes to break ground soon.
With no delivery date yet announced, Mr de Leon said timelines had to be considered carefully, as government approval, permits, and regulations could create necessary delays.
COMPANY%20PROFILE
%3Cp%3E%3Cstrong%3ECompany%20name%3A%3C%2Fstrong%3E%20Sav%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%202021%3Cbr%3E%3Cstrong%3EFounder%3A%3C%2Fstrong%3E%20Purvi%20Munot%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20Dubai%3Cbr%3E%3Cstrong%3EIndustry%3A%3C%2Fstrong%3E%20FinTech%3Cbr%3E%3Cstrong%3EFunding%3A%3C%2Fstrong%3E%20%24750%2C000%20as%20of%20March%202023%3Cbr%3E%3Cstrong%3EInvestors%3A%3C%2Fstrong%3E%20Angel%20investors%3C%2Fp%3E%0A
Queen
Nicki Minaj
(Young Money/Cash Money)
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
Our legal consultants
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
