Macy's seeks venture partner for store in downtown Minneapolis

It only took a few short sentences from Macy's top leadership to quell concerns about the fate of its downtown Minneapolis store.

In announcing the company's third-quarter results Wednesday, Macy's executives said the Minneapolis building was considered a "flagship real estate asset" along with its store locations in Manhattan at Herald Square, San Francisco at Union Square and Chicago on State Street.

They said the company is looking to form joint ventures with real estate partners to redevelop these four locations "in a manner that maintains a robust Macy's retail store presence while also bringing alternative use into those buildings."

Chicago developer Sterling Bay is believed to be one of the partners on the Minneapolis store redevelopment. That firm did not return requests for comment.

The closing by Macy's of its store in downtown St. Paul two years ago, along with another landmark store in downtown Pittsburgh this summer, has gnawed at boosters of downtown Minneapolis, who worried that the retailer might abandon it as well.

Macy's owns three buildings in the 700 block of Nicollet Mall but occupies just about half of the total space in them. The oldest portion of the property was built in 1902, while the other two adjoined structures were constructed in 1913 and 1929. Together, they contain about 1 million square feet of space, equivalent to two-thirds of the IDS Center, the 57-story tower across the street.

The buildings for decades were home to the flagship Dayton's department store, which was rebranded as Marshall Field's in 2001 and then as Macy's in 2006.

Some activist investors had been pressing Macy's to form a real estate investment trust and place its real estate assets in it.

But the company said its directors determined such a move wouldn't provide enough value.

The news was buried amid a disappointing third-quarter earnings report Wednesday. Macy's missed investors' expectations with a third-quarter profit of 56 cents per share, down from 61 cents a year ago. Revenue fell to $5.9 billion from $6.2 billion a year ago.

Executives lowered their outlook for the rest of the year, noting the company's inventory was "excessive" at nearly 5 percent higher than a year ago.

Shares in Macy's fell 14 percent to close at $40.44, their lowest price since early 2013.

Kristen Leigh Painter • 612-673-4767