Macy’s, Inc. is looking to boost its finances as the coronavirus halts brick-and-mortar sales.
According to a Reuters report, the company has hired investment bank Lazard Ltd. to help it weigh its financial options. Additionally, Macy’s has asked Lazard’s advisers to assist with managing liabilities and is mulling alternatives including new financing, the report says. Lazard typically helps financially troubled companies rework their debts.
A spokesperson for Macy’s confirmed to FN that the company is “exploring” options to improve its capital structure but did not elaborate on its partnerships.
“As we have previously communicated, the coronavirus pandemic continues to take a toll on Macy’s Inc.’s business,” the representative said. “Macy’s Inc. has taken multiple actions to improve our position and improve financial flexibility. … The company is also exploring numerous options to strengthen our capital structure. We have relationships with a range of advisers.”
Since March 18, the retailer’s fleet of over 750 stores has been closed. This includes its namesake units as well as the Macy’s Backstage, Market by Macy’s, Bloomingdale’s, Bloomingdale’s the Outlet and Bluemercury banners. The company’s e-commerce site remains open, but it says it has “lost the majority” of its sales as stores remain shut.
As store closures drag on with no clear end date in sight, Macy’s announced on March 30 that it would furlough the “majority” of its 120,000-plus employees. Through at least May, furloughed workers will continue to receive health benefits, and the company expects to bring back employees “on a staggered basis as business resumes.”
Macy’s had already suspended its quarterly dividend, deferred capital spend and tapped its $1.5 billion revolving credit facility. Chairman and CEO Jeff Gennette is forgoing his salary starting April 1. In addition, the company has announced plans to reduce the salaries of its management team members: All employees at the director level and above are expected to take pay reductions that could last “for the duration of the crisis.”
In early February, Macy’s unveiled an ambitious three-year turnaround plan that included trimming 125 stores from its total footprint, cutting 2,000 jobs — or about 9% of its corporate workforce — and ramping up investments in higher-margin private labels and off-price through Macy’s Backstage. It shared expectations for these moves to save the company $1.5 billion annually by the end of fiscal 2022 and said it expected its top 250 stores to account for 78% of sales by 2021.
So far in 2020, Macy’s has shed more than 70% of its market capitalization, which is now about $1.5 billion, roughly a quarter of what it was last year. In light of the uncertainty surrounding the coronavirus, the company has withdrawn its sales and earnings outlook for the 2020 fiscal year without putting forth an updated forecast.