Big Island

To: The Files, Macy’s Inc.

From: Eddy Soukhaseum

Date: February 26, 2016

Subject: Analysis of news regarding the Company

Summary of news article:

An article published on www.reuters.com describes Macy’s recent winter numbers falling less than expected for the first time in four quarters. The recent decline in sales was contributed by a warm winter and the strong dollar hurting tourist spending. The decline in sales have consequently resulted in Macy’s to close 40 of their stores and lay off 2,000 employees. The article also added the pressure from Macy’s shareholder, Starboard Value LP, pressuring the retail company to monetize its real estate assets, which the hedge fund estimates at about $21 billion. The article also mentions there was “a high degree of initial interest” among parties Macy’s approached for partnerships or joint ventures for its flagship and mall-based stores.

Related business risks:

The declining number in sales to a declining customer base, who are moving towards shopping online, is a cause for concern if the market continues to be depressed. If Macy’s does monetize their real assets, are they able to sell the property in an adequate amount of time to cover their current liabilities? A partnership or joint venture can be complicated and it is unknown in what market or what companies will be associated with this strategy.

Related risks of material misstatement: