You probably know the story about two men running away from a bear. One wonders aloud if they can outrun the animal. The other man says he doesn’t have to outrun the bear, just his friend. Macy’s announcement that it has raised roughly $4.5 billion in new financing may be the department store equivalent as the retailer now seems ready to move ahead with purchasing new merchandising and paying down its debt on time while many of its rivals (J.C. Penney, Lord & Taylor, Neiman Marcus and Stage Stores) have either filed for bankruptcy or appear as though they may be headed in that direction.
The nation’s largest department store operator announced that it has negotiated $3.15 billion in asset-based credit in addition to a previously announced $1.3 billion bond offering.
Jeff Gennette, chairman and CEO of Macy’s, Inc., said the deal, which was made based on the strength of the company’s real estate portfolio, would give the retailer “sufficient flexibility and liquidity to navigate our current environment and fund our business for the foreseeable future.”
Speaking to stakeholders, Mr. Gennette said improved liquidity along with the retailer’s previously announced Polaris strategy to reinvigorate its business makes him confident that Macy’s, Inc. will remain “a strong company to work for, invest in and partner with.”
The three-year Polaris initiative is focused on building on the strengths of Macy’s core businesses (Macy’s, Bloomingdale’s and Blue Mercury), building its private label offerings and improving the customer experience with an expanded loyalty program, digital initiatives, remodeled stores and its new Market by Macy’s format, now being tested.
Despite a tough first quarter, Mr. Gennette expressed optimism about Macy’s business as it begins reopening stores across the country. The retailer, which announced this morning that it lost $2.10 a share versus a gain of 44 cents last year, said that digital sales picked up steam during the quarter and that sales at the roughly 450 locations it has reopened since June 1 are performing ahead of its expectations.
“We are seeing strong sell-through of seasonal merchandise and anticipate that we will exit the second quarter in a clean inventory position,” said Mr. Gennette. “The holiday season will be crucial, and the team is working now to get the right merchandise and assortment in place.”
