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
-
What the Comcast Cable Spinoff Means for InvestorsComcast has announced plans to spin off select cable networks and digital assets into a separate publicly traded company. Here's what you need to know.
-
TJX Stock: Wall Street Stays Bullish After EarningsTJX stock is trading lower Wednesday despite the TJ Maxx owner's beat-and-raise quarter, but analysts aren't worried. Here's why.
-
What the Comcast Cable Spinoff Means for Investors
Comcast has announced plans to spin off select cable networks and digital assets into a separate publicly traded company. Here's what you need to know.
-
TJX Stock: Wall Street Stays Bullish After Earnings
TJX stock is trading lower Wednesday despite the TJ Maxx owner's beat-and-raise quarter, but analysts aren't worried. Here's why.
-
Target Is the Worst S&P 500 Stock After Earnings. Here's WhyTarget stock is down big after the retailer missed expectations for its third quarter and slashed its full-year outlook. Here's what Wall Street is saying.
-
For a More Secure Retirement, Build in Some 'Safe Money'To solidify your retirement plan, write it down, reduce your market risk and allocate more safe money into your plan for income.
-
Five Steps to a Mindfully Fearless CareerIf, like many women, you're struggling with imposter syndrome, try developing an athlete's winning mindset. It's as simple as facing one small fear every day.
-
Stock Market Today: Stocks Rally Despite Rising Geopolitical TensionThe main indexes were mixed on Tuesday but closed well off their lows after an early flight to safety.
-
What's at Stake for Alphabet as DOJ Eyes Google's ChromeAlphabet is higher Tuesday even as antitrust officials at the DOJ support forcing Google to sell its popular web browser. Here's what you need to know.
-
Lowe's Stock Is Falling After Earnings. Here's WhyLowe's stock is lower Tuesday as Wall Street weighs a beat-and-raise quarter against declining revenue. This is what you need to know.
