Exclusive: Macy’s calls on Lazard to strengthen its finances while the coronavirus reduces its sales – sources


NEW YORK (Reuters) – Macy’s Inc (M.N) engaged the investment bank Lazard Ltd (LAZ.N) to explore options to strengthen his finances after the department store operator lost most of his income by closing all of his stores in the aftermath of the coronavirus epidemic, people familiar with the matter said.

FILE PHOTO: People wait to enter Macy’s Herald Square before the early opening of Black Friday sales in Manhattan, New York City, United States, November 28, 2019. REUTERS / Andrew Kelly

The decision by Macy’s, the largest department store operator in the United States in terms of sales, is a sign of the seriousness of the crisis facing brick and mortar retailers, who were already struggling with the passage online shopping. The pandemic has forced store closings and mass departures of employees while state after state has issued shelter orders on the ground to contain the spread of the coronavirus, which causes COVID- respiratory disease. 19.

Macy’s called on Lazard bankers who specialize in finding ways to recapitalize companies in financial difficulty and rework their debts, the sources said. Macy’s has also recruited debt restructuring lawyers at Kirkland & Ellis LLP, two of the sources said.

Macy’s asked his advisers to help him manage his liabilities and explore options that might include new financing, the sources said, adding that no debt restructuring was imminent.

The sources asked not to be identified because the deliberations are confidential.

A spokesperson for Macy’s said in a statement that the company “is exploring many options to strengthen our capital structure,” adding that it maintains relationships with various advisers.

The company, which operates department stores Macy’s and Bloomingdale’s, declined to comment beyond previous tips it had taken in response to the pandemic, including the suspension of its quarterly dividend, the withdrawal of its line of credit, the deferral of expenses, reduction of wages to maximum management levels and permission of the majority of its approximately 123,000 employees.

A spokesperson for Kirkland did not immediately respond to a request for comment. A Lazard spokesperson declined to comment.

The company, which also operates the bluemercury beauty and spa chain, has $ 3.6 billion in long-term debt and about $ 7 billion in store lease obligations. It had $ 685 million in cash at the end of its last fiscal year and recently pulled an additional $ 1.5 billion from a line of credit while its stores remained closed.

Macy’s decision to explore new financing, among other options, makes it the last American retailer to do so. On Thursday, its rival Nordstrom Inc (JWN.N) raised $ 600 million by placing real estate assets that included five stores, six distribution centers and its Seattle headquarters in a separate company and borrowing against it by issuing bonds.

Macy’s was already cutting costs before the coronavirus outbreak, with plans to close 125 stores permanently over the next three years and cut more than 2,000 jobs. These are in addition to the more than 100 store closings and thousands of job cuts it has deployed since 2015.

The 161-year-old department store operator closed all 775 department stores last month in response to the pandemic. This has made his e-commerce operations his only source of income; E-commerce accounted for about 25% of its roughly $ 25 billion in sales in the 12 months ending February 1.

It is not known when Macy’s and other department store chains will be able to reopen their stores. Credit rating firm Fitch Ratings Inc. said earlier this month that it expects Macy’s revenue to drop nearly 25% this year. The New York-based company’s shares have fallen more than 60% since the start of this year, giving the retailer a market capitalization of around $ 2 billion.


Like many companies hard hit by the pandemic, Macy’s said its chief executive, Jeff Gennette, would give up paying during the crisis. Last week, Macy’s announced that its chief financial officer had decided to resign in late May and that he was looking for a replacement.

Macy’s has become an American household name over the decades, known for its Thanksgiving Day parade in New York and its flagship store Herald Square, which spans one block in the heart of Manhattan.

Macy’s has $ 530 million in debt owed in January 2021 and an additional $ 450 million in early 2022, and likely has enough cash to make these payments, said Fitch.

The company’s credit rating has been downgraded to the trash by two rating companies in recent weeks, which has cost the retailer more money to borrow. However, Macy’s unwanted rated bonds rebounded last week after the Federal Reserve announced that it would extend its asset purchase program to corporate bonds that had been higher quality but were then downgraded to undesirable status.

(This story was archived to correct the seat in New York, not Cincinnati in the 5th to last paragraph)

Report by Jessica DiNapoli and Mike Spector; Editing by Leslie Adler

Our standards:Principles of the Thomson Reuters Trust.


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