Kohl’s can’t catch a break from Wall Street.
For the second time in as many months and third time in a year, an activist investor is putting pressure on the department store chain to make changes or sell the company.
Activist hedge fund Macellum Advisors, which owns about 5% of Kohl’s (KSS) stock, said in a letter Tuesday that Kohl’s board of directors and leadership team spent last year “materially mismanaging the business and failing to implement necessary” improvements.
Macellum said it planned to nominate a slate of new board members unless Kohl’s decides to work with the firm. If Kohl’s board won’t make changes, the company should explore a sale, the activists said.‘
Shares of Kohl’s rose around 6% Tuesday on the news.
In a statement Tuesday, the retailer said Macellum had been “unwilling to constructively engage” with Kohl’s and said the fund’s letter and announcement were “distracting.”
Kohl’s strategy is “producing results,” the company said.
This is not the first time Macellum has targeted the department store company. Last year, the fund joined with a group of activists to push Kohl’s to pursue a new strategy and revamp its board. Kohl’s reached a deal with the group in April and added three new directors.
But Macellum says it’s coming back for another shot at Kohl’s because its stock has dropped around 20% since the April settlement, lagging retail competitors.
Macellum’s renewed involvement comes a month after another firm, Engine Capital, said Kohl’s should spin off its online business or find a buyer to take the whole company private.
Kohl’s has attracted pressure from Wall Street, despite avoiding the fate of many other department store chains.
Amazon (AMZN), Target (TGT), TJX (TJX) and others have pressured the department store sector for years and some, such as Sears and Neiman Marcus, have been driven into bankruptcy.
But Kohl’s has taken creative steps to draw shoppers in recent years, including partnering with Amazon to accept returns of Amazon purchases at its stores. Kohl’s has also added new clothing and homegoods brands, expanded its sportswear and beauty selections, and leased out space at a handful of stores to Planet Fitnes (PLNT)and Aldi.
Still, Kohl’s sales stagnated from 2016 to 2019 and plunged 20% to $15 billion in 2020, with Covid-19 restrictions forcing many locations to close in the spring, summer and early fall.
Kohl’s rebounded in 2021, however. During its latest quarter ending October 30, sales at stores open for at least one year increased 14.7% compared with the same stretch last year.
By Nathaniel Meyersohn