Please ensure Javascript is enabled for purposes of website accessibility

Why Macy's Stock Is Down Today

By John Rosevear – Apr 22, 2020 at 12:15PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It's reportedly looking to raise $5 billion in emergency cash.

What happened

Shares of Macy's (M 4.47%) were down on Wednesday, after a report that the company is working on a deal to pledge assets in return for as much as $5 billion in emergency financing to weather the coronavirus pandemic.

As of 12:00 p.m. EDT, Macy's shares were down about 8.3% from Tuesday's closing price. 

A Macy's sign on the outside of a store.

Image source: Macy's.

So what

The cash-crunched retailer is looking to raise as much as $5 billion via new secured debt offerings, CNBC reported before the markets opened on Wednesday. According to the report, which cites multiple "people familiar with the situation," Macy's is seeking to use its inventory as collateral to raise $3 billion and some of its real-estate holdings as collateral for an additional $1 billion to $2 billion.

The company's iconic flagship store in New York's Herald Square will not be part of the collateral offered, CNBC said.

Macy's reportedly retained investment bank Lazard and restructuring experts at the law firm of Kirkland & Ellis earlier this month. 

Now what

Macy's was in the midst of a restructuring effort before the outbreak of the COVID-19 virus, with plans to close 125 stores over the next three years. The company has already drawn down its existing credit line, adding $1.5 billion to its balance sheet. 

But with almost $1 billion in debt coming due in the next two years and uncertainty about when (or whether) consumers will return to its physical stores, Macy's clearly needs some additional liquidity to ensure that it can avoid bankruptcy. 

As Macy's appears to be closing in on a deal to secure that liquidity, the question that retail investors are asking now is this: At what price? Stay tuned. 

John Rosevear has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Macy's, Inc. Stock Quote
Macy's, Inc.
$15.89 (4.47%) $0.68

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.