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New York (CNN Business)Activist investors are circling Macy’s and Kohl’s. The department store chains are fighting back.

Macy’s on Tuesday rejected calls from activist investor Jana Partners to spin off its e-commerce operations after completing a board review of the company’s entire strategy.
Jana Partners in October said that Macy’s could double its valuation with a spinoff. But Macy’s, which also owns Bloomingdale’s, said Tuesday the costs of separating its online arm from its brick-and-mortar division would be too high.

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    Macy’s said its plan to remain one company and expand its digital business, private brands and small, off-mall stores is a stronger path forward than a split.

      “In every alternative scenario we considered, the execution risk for the business and our customers was too high,” Macy’s CEO Jeffrey Gennette said on a call with analysts. “Macy’s has a stronger future as a fully integrated business.”

      The announcement came as Macy’s reported strong quarterly earnings.
      Macy’s said sales at stores open for at least a year increased 28.3% during the quarter compared with the same stretch last year, when Covid-19 vaccines had not yet rolled out and many shoppers were avoiding stores.
      Macy’s (M) stock increased around 6% during morning trading Tuesday.
      Activist investors are also urging changes at Kohl’s (KSS), including spinning off its e-commerce business or accepting a buyout offer to go private.
      Kohl’s has rebuffed those demands, saying its strategy is “producing results.”
      Wall Street has targeted Macy’s and Kohl’s because the chains have lagged behind other retailers in recent years.

        Department stores have been pressured by Amazon (AMZN), online clothing brands, Target (TGT), TJ Maxx (TJX)and others in recent years. Some, such as Sears and Neiman Marcus, have been driven into bankruptcy.
        But Macy’s and Kohl’s are betting that their own strategies, not activists on Wall Street, give them the best chance to fend off retail competitors and avoid the same fate as vanished department stores.
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