Macy’s would be more valuable if it just shut down its business and sold everything off for parts.

That’s the argument activist investment firm Barington Capital and private equity firm Thor Equities said in a proposal Monday that called on the company to make drastic changes to boost its stock price.

The problem, they say, is Macy’s is sitting on real estate that is more valuable than the company itself — an untenable situation that masks the true value of the company. Macy’s struggles are making its stock so unattractive that it is worth less than the sum of its parts, they argue.

The solution: Break it all apart.

“Macy’s owns valuable real estate holdings,” Barington said in a presentation posted online. “The market is implying that Macy’s retail operations are essentially worthless.”

The investors claim that Macy’s real estate, including its flagship store at Herald Square in New York City, is worth up to $9 billion on the open market, nearly double Macy’s closing market value Monday of $4.7 billion. They say Macy’s can squeeze more value out of its real estate by paying rent to a subsidiary controlling the property. The company could also sell space to developers to build on Macy’s real estate, like hotels, apartments or offices.

Macy’s owns 720 stores, including luxury department store Bloomingdale’s and beauty chain Bluemercury. The real estate value locked up in Macy’s retail locations is not a new discovery — investors and developers have long sought to build atop Macy’s Herald Square location, and Macy’s has proposed an office tower above the store.

Macy’s responded to the investor proposal Monday, saying the company is committed to “delivering sustainable, profitable growth and driving shareholder value.” Macy’s said it was confident in its strategy, which includes closing underperforming stores and investing in its top 50 stores with better staffing and new merchandise.

Investor groups such as private equity funds and hedge funds have sometimes bought struggling or underperforming retailers in recent years, with the stated goal of taking them private, turning them around and selling them for a profit. But the results have often led to closures, not salvation, for companies such as Sears and Toys “R” Us.

Macy’s should reject the investor proposal, said Mark Cohen, who retired as director of retail studies at Columbia Business School this year.

“The investors are not interested in long-term viability of the business,” he said. “Left to their own devices, these guys would strangle the company.”

The investors did not immediately respond to CNN’s request for comment.

The path laid out by Barington and Thor is similar to one followed by hedge fund operator Eddie Lampert after he purchased control of Sears and Kmart. He ended up selling off or developing much of their real estate.

He also sold off some of the many of the valuable brands that had been associated with Sears, including Craftsman tools. And he spent more than $6 billion repurchasing shares of Sears Holdings, the company he formed to run the two chains, in a failed attempt to support its plunging stock price.

The results were not good. Stores were closed when they could no longer afford to pay rent to the separate company that now controlled its real estate. Sales plunged as the company was starved of the cash needed to invest in stores to make them attractive to shoppers. In 2018, after years of closing hundreds of stores, the company filed for bankruptcy. While it emerged from bankruptcy early in 2019, it has continued to struggle and has closed most of its remaining stores, leaving it with only a handful of Sears locations, and no full-size Kmarts in the mainland United States.

And Sears and Kmart are not the only once-iconic retail brands to die once private equity investors and hedge funds took control. Retailers from upscale department store chain Lord & Taylor to RadioShack to Toys ‘R’ Us to Payless Shoes and Sports Authority have all closed in the last 10 years.

Macy’s struggles

Macy’s and other department stores, such as Kohl’s, Nordstrom and JCPenney, have lost out in recent years to online retailers like Amazon; big box retailers that sell groceries and a range of consumer goods like Walmart and Target; and discount clothing chains such as TJ Maxx and Marshalls. Macy’s stock (M) has dropped around 70% over the past decade.

It’s the second time activist investors have tried to pressure Macy’s this year.

Macy’s management ended talks with private investors attempting to take over the company in July. The investors planned to take Macy’s private and consider spinning off its real estate assets or separating its online operations from brick-and-mortar stores.

Macy’s board of directors voted unanimously to end discussions with Arkhouse Management and Brigade Capital Management over the investors’ offers to acquire the chain. Macy’s said it was unclear that the investors could finance a deal and it was not in shareholders’ best interests.

The new proposal also comes just weeks after Macy’s disclosed that an employee intentionally hid as much as $154 million in expenses over the course of nearly three years.

Macy’s was forced to delay its quarterly earnings report because of the accounting problem. The company reports quarterly earnings Wednesday.