Amidst the COVID-19 pandemic, Macy’s has hired investment bank Lazard Ltd. to explore options for strengthening its finances after the retail firm incurred heavy losses post shutting down all its stores, confirmed people familiar with the matter.
Lazard specialises in exploring options to recapitalise financially troubled companies and rework debts.
Macy’s move shows the severity of the crisis facing offline retailers in US. The spread of the pandemic has made retail companies close stores and there also have been widespread furlough of employees.
Two sources said that Macy’s has also enlisted debt restructuring lawyers at Kirkland & Ellis LLP. The largest departmental store chain has also asked its advisers to help manage its liabilities and explore options that could include new financing while adding that no debt restructuring is imminent.
Macy’s digital sales are among the strongest in the department store sector; however they are not enough to control the financial losses caused by the store closures.
Macy’s has US $ 3.6 billion in long-term debt and roughly US $ 7 billion in store lease obligations. The firm that also runs the Bluemercurbeauty products and spa chain, had US $ 685 million in cash as of the end of its most fiscal year and recently drew down another US $ 1.5 billion from a credit line.
The department store chain had closed all of its 775 stores last month in response to the outbreak, which made its online platform its only source of revenue that accounts for about 25 per cent of its roughly US $ 25 billion in sales in the 12 months ending February.
Last week, Macy’s Chief Financial Officer Paula Price resigned from the role effective 31 May after being in the position for less than 2 years.
