Arkhouse has also mounted a board challenge against Macy's, seeking to replace a majority of directors by naming nine candidates for election to the 14-member board. It intends to push ahead with its challenge even as the two sides are holding discussions, one of the sources said. In the meantime, Macy's has been restructuring its operations as it grapples with a slowdown in consumer spending that has weighed on its revenue and profit. Last month, it said it would shutter about 150 stores through 2026 as part of a plan that would help save $100 million in costs this year. Reuters reported on Tuesday that Macy's rival Nordstrom was also in deal talks, as that department store operator's founding family revived a previously abandoned plan to take the company private. (Reporting by Abigail Summerville in New York and Svea Herbst-Bayliss in BostonEditing by Nick Zieminski)