Macy's has rejected the takeover bid by real estate investment company Arkhouse Management and asset management company Brigade Capital Management placed in December due to the companies allegedly failing to "provide evidence of a viable financing plan" and the "unsolicited proposal" lacking "compelling value".
The board said it conducted a careful review of the proposal in consultation with its independent legal, financial and real estate advisors and remains open to opportunities to create shareholder value.
It added it will continue to act in the best interest of all shareholders and is regularly reviewing the company’s structure, strategies and internal and external value-creation levers.
The takeover bid rejection follows a Macy's spokesperson confirming to Just Style that it has "made the difficult decision" to reduce its workforce by 3.5% as it prepares "to deploy a new strategy to meet the needs of an everchanging consumer and marketplace".
According to The Wall Street Journal, the 3.5% reduction equates to 2,350 jobs and will include the closure of five stores.
The publication also noted the move comes ahead of Macy’s president Tony Spring succeeding Jeff Gennette as chief executive officer in February.
At the time of the takeover bid being reported in December GlobalData's retail managing director analyst Neil Saunders told Just Style it meant the US department store would need to make a "judgement call" - either show confidence in their future plans and keep Macy’s public, or let Macy’s go private "in a transaction that would likely see the brand fade further and faster".
He is not surprised about the company's latest plan to cut jobs by 3.5% and stated: "Macy’s decision to cut a handful of stores and trim its workforce is part and parcel of the chain’s longstanding policy to shrink itself to bolster profits."
Saunders admitted that "while some pruning of the store estate and good personnel discipline is necessary at any retailer," he cannot help but "believe that the latest round of Macy’s cuts is a consequence of poor management and a lack of focus on growing the top line".
Of course, he added: "Macy’s needs to keep investors satisfied, and its focus on profit has accomplished that at a time when sales performance has been extremely lacklustre. However, this strategy comes with an expiry date; ultimately no retailer can shrink itself to success."
Saunders hopes the confirmed cuts are a one-off rebalancing that will not be repeated across the balance of this year.
He concluded: "Under the incoming leadership of Tony Spring, Macy’s desperately needs to focus on improving the retail experience and bolstering its trading. This path is admittedly challenging but, in the long term, it is far more sustainable than constant cost-cutting."
