Macy's isn't the only retailer trying to spoil the appetite of activist investors who are hungry for their property. Likewise, Ethan Allen's real estate assets have attracted the attention of Sandell Asset Management, which estimated their worth at roughly $450 million.
But in a presentation to investors in November, the retailer said its strategy of owning select real estate assets "ensured that Ethan Allen survived the Great Recession that devastated much of the cyclical furniture industry and led to the bankruptcy and demise of several major furniture industry competitors."
There have been plenty of examples of failed activism in the sector, from Bill Ackman's push for a Ron Johnson-led J.C. Penney, to Eddie Lampert's work to combine the Sears and Kmart nameplates, resulting in a downward spiral of revenues at Sears Holdings. Other cases that were less lethal — yet nonetheless not very successful — were Apex's stake in The Container Store, and Leonard Green & Partners' involvement with The Sports Authority.
Still, PwC's Steve Barr emphasized that activist meddling and private equity acquisitions can "really transform" retail businesses.
One example of this is Restoration Hardware. The high-end home furnishings shop was taken private in 2008 for roughly $175 million. Today, the company's market cap sits at $2.5 billion.
Paul Altman, managing director at The Sage Group, said pressure on bricks-and-mortar retailers has not slowed down appetite mergers and acquisitions in the sector.
He said his firm is seeing a "high level of activity" in the space, which he attributed to traditional retailers' need to find ways to keep innovating. The difference, however, is that buyers used to complete transactions simply for growth's sake; now, the action now has to check off a strategic box.
"We've found the capital to be really hungry for very good brands, but very disciplined," he said.
As far as going private, HRC Advisory's Efros said she is a "huge proponent" of retailers taking this route — one that recent reports have suggested department store Kohl's is considering. (The company recently declined to comment on the headlines, citing their quiet period.)
Going private provides a company the opportunity to fix its business without the scrutiny of investors, in many cases allowing the retailer to emerge as a stronger public entity a few years later, Efros said.
"You're stronger, you're leaner, you're firmer and you're focused on the right things," she said.
Correction: This story has been updated to correct attribution.