Shelly Banjo is a Bloomberg Gadfly columnist covering industrial companies and conglomerates. She previously was a reporter at Quartz and the Wall Street Journal.

Don't call it a comeback. Seriously, don't.

Share Build
Macy's shares shot up as much as 9% Thursday after announcing a real estate deal with Brookfield
Source: Bloomberg
Intraday times are displayed in ET.

Shares of Macy's Inc. shot up by as much as 9 percent on Thursday, after the department-store chain said it had struck a deal with real-estate company Brookfield Asset Management to work on a plan to redevelop 50 of its 800 stores, 6 percent of its store base. It also said that, as it set itself "up for a comeback," its sales declines for the full year wouldn't be as deep as it first expected. Hooray?

I get it. Investors were just happy Macy's was doing something -- anything! -- to wring some money from its real-estate holdings.

But this deal is nowhere close to where Macy's should already be when it comes to fulfilling its promises to meaningfully monetize its real estate, which could be worth as much as $21 billion -- more than the entire enterprise value of its retail operations.

It's also worth noting that Macy's still hasn't delivered on the 100 closings it promised last summer -- a promise that drove its stock up by 17 percent.  Why hasn't it, at the very least, come out with a list of the stores it plans to close?

Building Blocks
Starboard estimates Macy's real estate is worth $21 billion
Source: Starboard Value

Starboard, the hedge fund that pushed Macy's to do something with its real estate, has already said it was frustrated with Macy's dragging its feet and has cut its stake in the company by 39 percent. Hedge fund manager David Einhorn has dumped the stock at a mega-loss after he gave up on it fulfilling its word. Even the Securities and Exchange Commission has asked Macy's to stop merely talking about making money from real estate if it isn't actually doing it. 

Investors propping up the stock Thursday also ignored the fact that Macy's diluted third-quarter earnings came in at just 17 cents per share, nowhere near Wall Street's 41-cent estimate. Traffic dropped by 6 percent from a year earlier, and sales at established stores dropped by 3.3 percent from a year earlier, marking the seventh straight quarter of sales declines. 

Out Of Fashion
Macy's year-over-year sales have dropped for seven straight quarters
Source: Bloomberg

The declines are even more notable because, as Macy's laps year-ago losses and rids under-performing locations from its comparable store base--it closed 40 stores last year-- it's supposed to be easier to show comparable sales growth, not harder.

The company's plans for rejuvenating growth during the all-important holiday-filled fourth quarter seemed to focus on reducing inventory, selling more stuff online, and jumping further into its lower-priced Backstage concept. It plans to put Backstage in 45 stores, which could cannibalize its full-price sales with lower-priced products. And if all else fails, Macy's CEO Terry Lundgren told CNBC Thursday he hopes the end of a brutal presidential election would usher in increased consumer spending.

Until there are real signs of consumer growth -- or more concrete measures to monetize real-estate holdings -- any confidence in a Macy's comeback still sounds like wishful thinking. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

  1. Macy's has announced eight store closures to date

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Shelly Banjo in New York at

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Mark Gongloff at