Dive Brief:

• Activist hedge fund Starboard Value has thrown in the towel and sold its stake in Macy’s after pressure on the struggling department store retailer to extract value from its real estate assets bore little fruit, unnamed sources told Reuters. Neither Starboard Value nor Macy’s immediately responded to Retail Dive’s requests for comment.

• Starboard founder and CEO Jeff Smith in October said that the firm bought into Macy’s “too early” and that it was growing impatient with the retailer, which has been reluctant to develop an aggressive real estate play along the lines of moves by Sears Holdings Corp. and Saks Fifth Avenue parent Hudson Bay Co. 

• Macy’s responded to the pressure by naming a board member and an executive with real estate chops, and it has announced the closure of 100 stores, many of which are to be sold and will fetch handsome price tags. Most recently Macy’s sold its historic downtown Minneapolis department store, a former Dayton's location, for $59 million in cash. 

Dive Insight:

Starboard announced its major stake in Macy’s in July 2015, and has been dialing up pressure on the retailer to reduce its footprint ever since. The Securities and Exchange Commission a year later leaned on Macy’s to make its real estate monetization efforts official, writing the company a letter suggesting that investors would be better served if it listed real estate sales as gains in a separate line on income statements, rather than as expense reductions. 

Experts have told Retail Dive that Macy’s does indeed have too many stores and is likely to end up shuttering even more than the 100 locations it has planned for closure by this year. While that push could furnish a steady supply of gains, the real estate plans that Starboard envisioned for its own payoff apparently are not part of Macy’s vision.

That’s at least in part because Macy's views rent from sale leasebacks as a form of debt, Reuters said. And though at the Bank of America Merrill Lynch 2017 Consumer and Retail Technology Conference on Tuesday, Macy’s CFO Karen Hoguet said that there "no sacred cows" in the company’s real estate plans, so far it seems unwilling to sell its iconic Herald Square location in New York City. 

With Starboard off its back, Macy’s will have some breathing room as Jeff Gennette prepares to take over from longtime CEO Terry Lundgren, the executive who oversaw the retailer's massive expansion across the U.S. in the early part of the century. Eventually, that expansion will be largely undone, especially in the Midwest.

“Sometimes you think you’re beating your competitors, when you’re actually buying the remnants of their dying chains,” Nick Egelanian, president of retail development consultants SiteWorks International, told Retail Dive last year.