Berkshire Hathaway (BRK.A) (BRK.B) has made a surprising return to a corner of the retail world it largely abandoned decades ago. In its latest 13F filing, the conglomerate disclosed a new position in Macy’s (M), marking its first exposure to a public department store in roughly 60 years. For long-time Berkshire watchers, that alone is enough to raise eyebrows.
Berkshire’s history with the department store industry dates back to the 1960s, when Warren Buffett and Charlie Munger invested in Hochschild Kohn, a Baltimore-based chain. That experience proved challenging, and Buffett later became famously wary of traditional retailers facing structural pressures. Since then, Berkshire has generally steered clear of the sector. That context makes the Macy’s purchase particularly intriguing.
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So what exactly does Berkshire see in Macy’s that the broader market may be overlooking? Let’s take a closer look at what may have inspired Berkshire to re-enter the department store business after six decades away.
About Macy’s Stock
Macy’s Inc. is a premier omnichannel retailer that operates hundreds of department stores, websites, and mobile applications. The company operates through three core brands: Macy’s, Bloomingdale’s, and Bluemercury. Macy’s is a quintessential department store, offering mid- to high-end apparel, cosmetics, and home furnishings. Bloomingdale’s is a luxury department store chain known for its high-end fashion and upscale shopping experience. Bluemercury is a specialty luxury retailer of cosmetics, skincare, and spa services. The retailer has a market cap of $5 billion.
Shares of the department store have fallen 6.5% on a year-to-date (YTD) basis. The drop was driven by broader economic concerns, including those related to the economic fallout from the Iran war. However, news of Berkshire’s investment injected fresh momentum into the stock, which has climbed more than 12.6% over the past five days.
www.barchart.com Why Berkshire’s Macy’s Bet Is More Interesting than It Looks
Warren Buffett’s Berkshire Hathaway just had one of its busiest quarters for stock buying and selling in recent memory. Yet among all the moves, one relatively small purchase appears to have captured the most attention: shares of Macy’s.
Berkshire revealed in a 13F filing last week that it had bought 3.04 million shares of Macy’s in the first quarter. That represents a 1% stake in the retailer, valued at roughly $55 million — clearly a small investment by Berkshire’s standards. So, what makes this purchase particularly interesting?
First, the Macy’s stake marks Berkshire’s first public investment in a department store since 1966, when Warren Buffett and his partner Charlie Munger acquired Hochschild, Kohn & Co., a Baltimore-based department store chain, for $12 million through a vehicle called Diversified Retail Companies, which later merged into Berkshire Hathaway. Meanwhile, the acquisition of Hochschild, Kohn & Co. proved to be a difficult investment. Despite putting in good management, adding escalators, and increasing credit, the store struggled against an antiquated distribution system and shifting consumer habits. Buffett sold it around 1970 and remained wary of brick-and-mortar retail for decades thereafter.
Second, the purchase may have been made personally by Warren Buffett, who was succeeded as Berkshire’s CEO by Greg Abel at the end of 2025. In a CNBC interview on March 31, Buffett was asked whether he was still making new stock purchases in his new role as chairman. He replied, “Got one tiny purchase.” Notably, Macy’s was Berkshire’s sole small purchase during the first quarter.
If the investment was indeed made by Buffett, it’s worth examining what might have prompted him to make that move. And even if the decision came from Abel, the question remains just as important.
Macy’s Value Case: Real Estate, Dividends, and a Low Valuation
Macy’s may have caught Berkshire’s attention thanks to its asset-rich real estate portfolio, improving operational performance, steady dividend policy, and low valuation. With that, let’s take a closer look at each of these points.
Macy’s owns or controls prime retail properties in high-traffic markets across the U.S. — a valuable physical asset base that has drawn interest from activist investors in recent years, as well as a takeover bid. The company owns 243 of its 665 stores, including its 1.1 million-square-foot flagship location in Herald Square in New York City, which covers an entire city block and has been independently valued at between $1 billion and $3 billion. Analysts estimate that the company’s extensive real estate portfolio is worth more than what is currently reflected in its market cap, offering a layer of asset-backed safety.
Then there is Macy’s “Bold New Chapter” strategy, which sits at the center of CEO Tony Spring’s turnaround plan. The strategy calls for closing roughly 150 underperforming stores through 2026 while concentrating resources on about 350 stronger “go-forward” locations. Macy’s reached a key inflection point in its turnaround in FY25, delivering its first annual comparable sales growth in years. Spring also unveiled plans to extend strategic initiatives to 75 more stores in 2026 under a new “Reimagine 200” program.
When it comes to dividends, Macy’s board of directors declared a quarterly dividend of $0.1915 per share last week. Its annualized dividend of $0.77 per share results in a dividend yield of 4.02%, significantly higher than the sector median of 2.61%. The company has paid dividends for 22 consecutive years. Moreover, it repurchased roughly 5% of its shares last year.
Finally, Macy’s looks attractive from a valuation standpoint at current levels. The stock currently trades at 9.05x forward-adjusted earnings, well below the sector median of 15.04x. The stock also trades near its book value.
What Do Analysts Expect for M Stock?
Despite Berkshire’s vote of confidence, Wall Street analysts remain cautious on M stock (at least for now), as reflected in its consensus “Hold” rating. Of the 12 analysts covering the stock, just two assign a “Strong Buy” rating, while nine advise holding and one issues a “Strong Sell” rating. The stock trades above its average price target of $18.62, though it still offers a 10% upside potential to the Street-high target of $22.
www.barchart.com On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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