Macy’s ($M) isn’t doing so hot these days.
Like many retail stores, the American clothing retailer is having trouble getting people into stores, buying merchandise from said stores, and generally keeping their stores open. The company is in the middle of a downsizing period where they’ll close hundreds of stores around the country, while figuring out how to make money on the real estate of existing and previous locations.
While the company struggles to figure out their current situation, Macy’s stock continues to sink. $M is down over 20% in the last year and over 11% in the last five years. Since the beginning of 2017, the company’s stock decreased by nearly 11% during a period of record index highs. If you’ve owned Macy’s stock for the last few years, chances are you probably lost money on your initial investment.
Fortunately, Macy’s isn’t done for just yet. The retail giant may have found a company willing to acquire them and put up with their losses and general corporate shenanigans. There’s just one catch: it would make America’s most famous department store chain a Canadian-owned company.
Hudson’s Bay is a Canadian retail giant.
Hudson’s Bay Company ($HBC.CA) owns everything from Saks Fifth Avenue and Lord & Taylor to Gilt and, yes, Hudson’s Bay. They’re based out of Toronto, Ontario, and have been around for nearly 350 years. The company filed for an initial public offering in October of 2012, though their stock has been down ever since.
Hudson’s Bay could turn Macy’s into a lean and mean retail leader again.
The company is allegedly in early talks to acquire the American retailer, so nothing is set in stone. Hudosn’s Bay, however, had success in the past with turning around troubled retailers, so acquiring Macy’s would make sense. Hudson’s Bay would undoubtedly close more of the company’s stores, but they would also be able to concentrate on Macy’s best performing stores after that. Hudson’s Bay also has better success online than Macy’s with subsidiaries like Gilt, and they could potentially help Macy’s online storefront in addition to their brick-and-mortar locations.
Macy’s investors and Hudson’s Bay investors are pretty positive on the potential takeover.
While Macy’s stock is currently down, their stock price actually increased by 9.5% in the last five trading days. Upon news of the discussions between both companies, Macy’s stock rose from 30.23 to as high as 33.76. Hudson’s Bay is currently up 4.91% as of this writing, as investors believe the company will gain a lot of value from adding Macy’s to their company portfolio.
Should you invest in both companies? Due to rumors of acquisition talks (which are apparently in the early stages), both stocks are changing in price a bit more frequently than normal. If acquisition talks continue and Hudson’s Bay decides to indeed buy Macy’s, then both stocks will likely see a nice increase. If talks fall through, however, both stocks could go back to levels before acquisition rumors, if lower.
If you think Hudson’s Bay or someone will eventually pick up Macy’s, you could invest after doing the proper research. Just note that both companies sustained substantial losses over the last several years on the market, and many investors are wary of investing in either stock (or the retail sector in general). If you don’t feel comfortable making such an investment, simply look elsewhere…or consider investing in Amazon ($AMZN), the one place where everyone’s going to shop instead of Macy’s.