What Happened?

Shares of department store chain Macy’s (NYSE:M) fell 7.3% in the pre-market session after the company delayed its third-quarter 2024 earnings release and conference call. This is typically not a good sign as it raises uncertainty, which markets generally dislike. The delay is to allow time for the completion of an independent investigation in relation to an accounting error uncovered while preparing its financial statements. The company also reported underwhelming preliminary third quarter results with net and comparable sales down 2.4% year on year.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Macy's? Access our full analysis report here, it’s free.

What The Market Is Telling Us

Macy’s shares are quite volatile and have had 18 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 9 months ago when the stock gained 18.5% on the news that the company announced it received a revised offer from Arkhouse Management and Brigade Capital to acquire all outstanding shares for $24.00 per share in cash they don't already own. The new offer is for $24 each, or $6.6 billion, up 14.3% from the $21/share offer announced in December 2023. The new offer represents a 33.3% premium to where Macy's shares closed on March 1, 2024.

Gavriel Kahane and Jonathon Blackwell, Arkhouse Managing Partners, highlighted "frustration with Macy's Board of Directors' delay tactics and refusal to engage with their credible buyer group. They emphasized the shareholder concern evident in the stock price selloff following recent restructuring plans and a dividend hike announced by Macy's."

Lastly, they reiterated their commitment to executing the transaction by increasing their offer to $24.00 per share in cash, citing "confidence in Macy's long-term prospects as a private company."

Macy's is down 20% since the beginning of the year, and at $15.83 per share, it is trading 26.5% below its 52-week high of $21.54 from March 2024. Investors who bought $1,000 worth of Macy’s shares 5 years ago would now be looking at an investment worth $1,017.

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