Macy’s Takeover Delay Drains Department Store Stocks (M)

Macy’s (NYSE:M) fell below their 200-day moving average after Wall Street revalued the stock on Monday to reflect the end of takeover talks with Arkhouse Management and Brigade Capital Management.

After months of negotiations, Macy’s (M) has pulled out further talks, given what the company considered to be a lack of commitment from Arkhouse and Brigade and an unacceptable offer. Shares fell by 14.5% at the open, implying a gap of $2.41 from Friday.

The news also weighs on shares of Nordstrom (JWN), Kohl’s Corporation (KSS), and Dillard’s (DDS), which are all trading lower in sympathy. Nordstrom (JWN) is bearing the burden due to ongoing take-private negotiations with Sycamore Partners, as well as efforts by the Nordstrom family to gain control of the company.

The reaction across the sector isn’t surprising given the post-COVID environment that department stores have been grappling with, as changing consumer spending, online competition and a drastic decline in U.S. malls have all created significant headwinds to profitability. Since 2020, Macy’s (M) has been forced to close about 30% of its total square footage, including its iconic flagship store in San Francisco. And while Nordstrom (JWN) and Macy’s (M) have courted potential suitors, only Neiman Marcus has been able to find a partner in Hudson Bay, parent company of Saks Fifth Avenue.

Nordstrom (JWN) stock was down 2%Dillard’s (DDS) stock was 1.5% less, while Kohl’s (KSS) was down 1.8%.