25/04/2024 10:17 AM


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Macy’s reportedly looks to use real estate for cash

A do not walk sign stands in front of a closed Macy’s Inc. store in Arlington, Virginia, U.S., on Tuesday, March 31, 2020.

Andrew Harrer | Bloomberg | Getty Images

Macy’s is looking for ways to use its real estate during the coronavirus pandemic to come up with cash, according to a Bloomberg report. 

The department store chain is looking to issue new bonds backed by some of its real estate, excluding its flagship Herald Square location, along with other assets, the report said, citing people familiar with the discussions. 

The interest rate and maturity of the debt is still under discussion, and plans remain fluid and could shift course, it said. 

Macy’s stock recently was down less than 1{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} in after-hours trading. Shares had closed Friday up nearly 3{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}, having tumbled 65{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} this year. Macy’s has a market cap of about $1.8 billion. 

“As we have previously communicated, the coronavirus pandemic continues to take a toll on Macy’s, Inc.’s business,” a spokeswoman told CNBC in an emailed statement. “While the digital business remains open, we have lost the majority of our sales due to our store closures.” 

“The company is also exploring numerous options to strengthen our capital structure,” she added. “We have relationships with a range of advisors.” 

All of Macy’s stores have been dark since March 19, to try to help curb the spread of Covid-19, thwarting the retailer’s turnaround plans and straining its finances. 

Macy’s operates 551 of its namesake stores, 34 Bloomingdale’s stores, 19 Bloomingdale’s outlet shops and 171 Bluemercury locations, according to its website. 

On March 20, Macy’s announced that it had fully drawn down its $1.5 billion revolving credit facility to try to bolster its liquidity. Macy’s has also since furloughed the majority of its roughly 130,000 employees. 

Ahead of this crisis slamming the U.S., Macy’s in early February had announced plans to shut 125 stores over the next three years, as part of its bid to get back to same-store sales growth. 

A research note from Cowen & Co. this week warned that Macy’s will breach its contracts with lenders at some point during the current quarter. But the firm said it believes that Macy’s will be able to at least temporarily lift its covenants, preventing a bankruptcy filing. 

Macy’s revolving credit agreement allows the company to issue $500 million of additional debt backed by real estate or other non-inventory-related assets, Cowen added.  

Separately, Cowen has valued all of Macy’s real estate at between $5 billion and $8 billion. 

Department store rival Nordstrom last week priced a $600 million offering of senior secured notes, using its real estate. 

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