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Jana Partners urges Macy's to separate e-commerce business

By Reuters

NEWYORK – Activist investment firm Jana Partners said on Wednesday that the share price of retailer Macy’s could double if the company separated its e-commerce business as customers buy more online.

“Macy’s could see an increase in its stock price by 100% if it followed the playbook of Saks,” Jana Partners portfolio manager Scott Ostfeld said at the 13D Monitor Active-Passive Investor Summit. He did not explicitly say whether the firm owns a stake in the company.

He said Macy’s online business could be worth about $14 billion. Macy’s as a whole has a market valuation of about $6.9 billion.

Saks Fifth Avenue announced plans this year to split off its e-commerce unit, allowing to continue its strong growth.

Ostfeld said Macy’s could create a digital goldmine and delight investors who may now be betting that the retailer’s stock price will fall, not rise, by selling it short.

The stock is currently trading at $22.28 and has fallen 42% in the last five years.

He said the market isn’t properly valuing the bricks and mortar retailer’s digital business and said a separation would spell a real miracle on 34th Street, referring to the American Christmas movie called “Miracle on 34th Street,” where Macy’s flagship store in Manhattan is located.

Jana has built a reputation for working collaboratively and behind the scenes over the two decades since Barry Rosenstein founded the company.