Dive Brief:

• Add Dillard’s to the list of retailers with activist investors in their midst pushing for big changes. Snow Park Capital Partners has taken a 2% stake in the department store retailer’s Class A stock and wants the company to sell off owned real estate property, Bloomberg reports. Dillard’s and Snow Park did not return requests for comment from Retail Dive.
• “Dillard’s is essentially an underleveraged real estate company that is masquerading as a low productivity retailer,” Snow Park Managing Partner Jeffrey Pierce told Bloomberg in an email. “We believe the value of Dillard’s vast real estate holdings is well north of $200 per share. … In fact, our estimated rental value to more productive retail tenants exceeds the company’s entire current income as a retailer.”
• Dillard’s beat analyst expectations and cleared some of the gloom around department store retail in May when it reported first quarter net income of $66.3 million. However, its net sales and same-store sales both fell by around 4%.

Dive Insight:

Dillard’s, which has fended off activists in the past as well, has plenty of company among retailers. Falling retail stocks are inviting investors who want to shake things up. Dillard’s, which owns most of the real estate its stores occupy — a total of 44.1 million square feet of owned property out of just under 50 million total — is an especially ripe target.

Activists have targeted both Macy’s and Hudson’s Bay Company with plans for the department store retailers to cash in on their real estate holdings. Macy’s fended of Starboard Value earlier this summer, passing on the hedge fund’s plan for Macy’s to spin off its real estate into joint ventures. In lieu of a wholesale sell-off, Macy’s is taking a more careful — and less lucrative for shareholders — approach.

On the other hand, Hudson’s Bay has spun off many of its properties into joint ventures, but was slow to cash in on them by orchestrating initial public offerings for the ventures. The Canadian department store retailer is now facing calls from an activist and other investors to sell off its most prized properties — including its iconic Saks store in Manhattan.

Activist agitation is not limited to department stores. Activist hedge fund Sandell Asset Management said in July it had taken a “meaningful” stake in Barnes & Noble and urged the big-box book retailer to sell itself or go private. Kate Spade in May sold itself to Coach following activist pressure to look for a buyout. Women’s apparel retailer New York & Company, Inc. in April defended its strategic plan to an activist wanting it to appoint a new independent director. And Whole Foods' decision to sell itself to Amazon likely had much to do with wanting to escape activist pressure.