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Department store operator Macy's (M), which has been in perpetual turnaround mode over the past several years, is ringing up some gains as its sagging stock price has lured in two new activist investors. After the Wall Street Journal disclosed that Barington Capital has amassed a stake in Macy's -- the size of which is undisclosed -- Barington and Thor Equities published a presentation this morning, calling on the struggling department store owner to make a series of changes that the firms believe could lead to gains of 150-200% for shareholders over the next three years.

• Of course, this isn't Macy's first recent run in with activist investors. About one year ago, Arkhouse Management and Brigade Capital Management began an effort to take Macy's private. That endeavor, which was ultimately unsuccessful after Macy's rebuffed a sweetened buyout offer of $24.80/share on July 15, did land two new members on Macy's Board of Directors. However, Macy's rejection of the bid, which equated to a 38% premium to the stock price at that time, also showed how resolute the company is in remaining independent and moving forward with its Bold New Strategy turnaround plan.
• To that end, Macy's quickly published its own press release following Barington's, stating that it remains confident in its Bold New Strategy, which continues to gain traction across all three pillars. As a reminder, those three pillars include strengthening the Macy's nameplate, accelerating luxury growth, and simplifying and modernizing its end-to-end operations. More concretely, the plan involves closing 150 full-line Macy's stores, with 50 closures slated for this year, while also launching the "First 50 Stores" -- a batch of pilot Macy's stores that's testing new retail strategies, formats, and emphasizing certain brands such as Birkenstock (BIRK) and NIKE (NKE). Macy's also intends to expand its Bloomingdale's and Bluemercury footprint in a bet that luxury will continue to outperform.
• While the initiative has had some early success, as illustrated by the initial First 50 stores delivering comps of +1.9% in Q3 compared to -2.0% for Macy's overall go-forward business, Barington and Thor don't believe that Macy's changes will drive meaningful and sustainable shareholder value. As such, the firms are pushing Macy's to take a more drastic approach that considers strategic alternatives for Bloomingdale's and Bluemercury, and creating a real estate subsidiary that maximizes the value of its properties. Further, the firms would like Macy's to reduce its capital expenditures to 1.5-2.0% of sales from the current rate of 4% of sales, enabling it to increase its share buybacks to $2-$3 bln over the next three years.

Macy's is no stranger to activist investors and with its stock down by about 15% on a year-to-date basis, it's unsurprising that the company remains a target. After surviving Arkhouse's and Brigade Capital's takeout attempt this summer, Macy's intentions to continue executing its turnaround plan are clear. Whether the company is more open to Barington's and Thor's ideas for shareholder value creation remains to be seen, but the activist pressure should keep Macy's Board of Directors plenty motivated to keep driving improvement and more efficiency.