Macy's (M) stock is spiraling Monday after the department store chain announced that it has terminated buyout discussions with Arkhouse Management and Brigade Capital Management.
Arkhouse and Brigade had offered Macy's a cash payout of $24.80 per share in May to take the retailer private, up from its offers of $24 per share in March and $21 per share in January. However, Macy's said the financing papers that were submitted with the offers were insufficient to give it confidence that a deal could be made in a reasonable period of time.
"As the Board has consistently demonstrated throughout this process, we are open-minded to exploring all paths to enhancing shareholder value," said Paul Varga, lead independent director at Macy's, in a statement. "At this time, after careful review, we have concluded that Arkhouse and Brigade's proposal lacks certainty of financing and does not deliver compelling value, notwithstanding the significant time, resources, and information shared during this process."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
After terminating talks, Macy's said it will now focus its efforts on its "A Bold New Chapter" strategy, which it first detailed in February. The strategy's three priorities consist of strengthening the Macy's nameplate by putting the customer first, accelerating luxury growth across its Bloomingdale's and Bluemercury brands and simplifying and modernizing its operations, which includes streamlining order fulfillment.
"The Board fully supports A Bold New Chapter strategy, and we believe it provides the best opportunity for value creation," Varga said.
Is Macy’s stock a buy, sell or hold?
Wall Street is sitting on the sidelines when it comes to the consumer discretionary stock. According to S&P Global Market Intelligence, the average analyst target price for M stock is $21.35, representing implied upside of more than 28% to current levels. Meanwhile, the consensus recommendation is a Hold.
Financial services firm UBS Global Research is one of the most bearish outfits on Macy's stock with a Sell rating and $10 price target.
"Macy's noted its consumer is still under pressure, driving higher credit balances and more value-oriented purchasing," UBS analyst Jay Sole said in a May 22 note. "Our view is the macro environment will continue to be tough on the consumer in the near-term and Macy's will continue to lose market share to rivals. Macy's continues to face challenges vs peers around price, product, and service, in our view. We expect earnings per share misses to continue to weaken sentiment and drive the share price lower.”
UBS' $10 price target represents a discount of nearly 40% to current levels.
Related Content
-
Crypto in Your Retirement Account? It's Not a Crazy QuestionTime was, including crypto in your retirement account seemed far too risky. Some financial experts now recommend it for diversification. But buyer beware.
-
Do You Feel Like Somebody’s Watching You? It's Your CarWhat's worse, you gave your vehicle manufacturer permission to watch you — no matter what you're doing. What are the car companies doing with that information?
-
Do You Feel Like Somebody’s Watching You? It's Your Car
What's worse, you gave your vehicle manufacturer permission to watch you — no matter what you're doing. What are the car companies doing with that information?
-
Stock Market Today: Dow Logs Longest Losing Streak Since AprilThe November Producer Price Index showed that inflation remains a tough beast to tame.
-
Why Uber Stock Is Volatile After GM's Cruise AnnouncementUber stock is swinging this week following news that General Motors is restructuring its Cruise unit. Here's what you need to know.
-
Why Adobe Stock Is Down After Its Earnings BeatAdobe stock is lower Thursday despite the tech giant beating expectations for its fiscal 2024 fourth quarter. Here's what you need to know.
-
Three Possible Tax Impacts for Retirees Under TrumpHow might a second Trump term affect your tax bill in retirement — or the inheritance tax bill for your heirs? This pro has three predictions.
-
What to Know About Leverage and Bitcoin's Meteoric RiseLeverage in the financial world can lead to astonishing success or a crushing collapse. How are investors using leverage to invest in bitcoin?
-
How Do You Know When It's Time to Change Financial Advisers?Sometimes a breakup is for the best. Here's how to handle 'the talk' and make the switch to a new professional who's a better fit for you.
-
Stock Market Today: Tech Stocks Rally as CPI Supports Lower RatesAn inline inflation report sealed the deal for a December rate cut and sent the tech sector soaring.
