Macy's hires consultants from AlixPartners to review business

Macy’s has hired management consulting firm AlixPartners to review its business structure as it faces pressure to spin off its e-commerce business.

Activist shareholder Jana Partners took a stake in the American retailer last month and sent a letter to the Macy’s board urging the spin-off of e-commerce operations into a separate company. Pure-play e-retailers tend to earn higher market valuations from Wall Street as e-commerce continues to grow and bricks-and-mortar operations face increasing headwinds.

“The board, myself, our advisors, we look at this all the time, and we look at how is the company more valuable to the shareholder — as a unified company or as separate companies?” Macy’s CEO Jeff Gennette told CNBC’s Jim Cramer in an interview.

AlixPartners will “pressure test” Macy’s analysis of its business structure, according to Genette. “We don’t have any conclusions, but we’ll be transparent with the market about where those findings take us,” he added.

The New York-based consulting firm advised Saks Fifth Avenue on spinning off its e-commerce business earlier this year. AlixPartners’ areas of expertise include performance improvement, turnaround, M&A, and risk and disputes.

Macy’s last week announced third-quarter earnings and sales that beat analysts’ estimates. For the three-month period ended October 30, earnings per share were $1.23 adjusted (vs 31 cents expected) and revenue was $5.4 billion (vs $5.2 billion expected).

Genette said the company added 4.4 million new customers – 41% via digital channels – amid an “improved economic environment.”

Macy’s online business accounted for 33% of total sales in the third quarter, up 10% from 2019.

The New York-based retailer also recently announced plans to create a digital marketplace enabling third-party merchants to sell their products on the Macy’s and Bloomingdales websites. The company has tapped Mirakl, an enterprise market technology company, to power the new platform.

Amazon, Walmart, and Best Buy have used the third-party marketplace model to expand their product assortment at relatively low cost. Bed Bath & Beyond has also announced plans to launch a similar marketplace.

However, the launch of a third-party marketplace at Macy’s could further amplify calls for an e-commerce spin-off, analysts say. “A possible danger of the marketplace is that it will decrease the overlap between stores and online,” Neil Saunders, managing director of GlobalData, told CNBC.