Telsey: Starboard Value's Case Of Spinning Off Macy's Real Estate Still Doesn't Make 'Total Sense'

In July this year, activist investor Jeffrey Smith revealed that he has initiated a stake in Macy's, Inc.M through his hedge fund Starboard Value with the intention of spinning off the company's real estate assets. With Macy's reporting disappointing second-quarter numbers on Wednesday, does Starboard Value have a boost to its cause?

Dana Telsey, CEO and chief research officer at Telsey Advisory Group, was on CNBC to answer that question and to lay down the reasons that might have caused Macy's to report worse-than-expected results.

Fight For Consumer Dollars

"I think one of the things that's happened with Macy's and I think we are going to see it from other retailers as they report their results," Telsey began. "We have weaker overseas tourism here in the United States, given our currency. So that's been one of the impacts. We have had mismatch of goods given the West coast port delays earlier in 2015."

She continued, "Goods came in later and they are needing to be marked down, so the clean-up period essentially was the second quarter. And frankly, you have a consumer that is a little bit more restrained. They're spending on other items --whether it's on travel, whether it's on restaurant -- it's more competitive to get that consumers dollars for Macy's and for others."

Doesn't Make Total Sense

Telsey was asked if Starboard's argument that spinning off Macy's real estate will significantly increase shareholder's value makes sense now that the company has performed poorly. She replied, "I don't think it makes total sense because Macy's one of the big differences between Sears and Macy's is Macy's a healthy retailer, Macy's has strong operating margins, Macy's has opportunities to use their cash to drive sales and profits."

"Not saying that they shouldn't analyze the real estate, see what does makes sense... The fact that they hired a team of advisors and team of specialists in real estate to evaluate their portfolio, it's not something that's going unnoticed," Telsey said.