Kohl’s Rejects Activist Investor Group’s Board Takeover Attempt
Kohl’s said Monday that it has rejected an investor group’s attempt to seize control of its board, saying it would disrupt the momentum it has in revamping its business, reports CNBC. The retailer’s shares soared more than 8 percent in trading Monday, after a group of activist investors confirmed it has nominated nine directors to the company’s board, looking to turn the business around and boost its stock. The group consists of Macellum Advisors, Ancora Holdings, Legion Partners Asset Management, and 4010 Capital, and together owns a 9.5 percent stake in Kohl's.
The investors want Kohl’s to add directors with deep retail experience, cut executive compensation, slash inventory levels, and consider selling some of its noncore real estate. Although Kohl’s said it’s been talking with the group since early December, the company said this was the first time the investors detailed their plans. In its statement, Kohl's responded that its business is already accelerating under its current growth strategy and it has refreshed half of its board, with six new independent directors since 2016.
Total Retail's Take: It seems Kohl's may not be taking all of its shareholders' opinions into account. In October 2020, the department store chain's board and management team announced a new vision and long-term strategic framework to accelerate the company's growth and profitability. However, apparently not all stakeholders were on board with the plan.
“It’s kind of shocking to us that they're not more willing to embrace our option ... our offer to help. We really want to fix this business,” said Macellum CEO Jonathan Duskin, in an interview with CNBC’s Scott Wapner Monday, about Kohl’s response. He added that the group took its efforts public because Kohl’s was “really unwilling to budge.”
The investor groups Legion, Macellum, and Ancora previously teamed up to force change at Bed Bath & Beyond in 2019, and ultimately added five members to that retailer’s board. The activists appear to be well-placed in their efforts, and according to Yahoo Finance, the campaign isn't a "catch and kill" attack on Kohl's CEO Michelle Gass. Rather, they would like to work with Gass to turn the company around. Kohl’s said Monday it will forge ahead with its strategic plans to invest further into beauty and activewear, as well as to gain more market share in women’s apparel. The company said its board and management team will continue to engage in talks with the activist group, with the goal of “identifying new ideas that could enhance shareholder value.”
Kohl's will need to follow through on this statement before its stakeholders seek more drastic measures, while finding ways to please its investors and building upon its growth plan. Revamping its board and installing a few of the investor group’s nine nominees, which include Duskin, former Burlington Stores CEO Thomas Kingsbury, and former Denny’s Chief Marketing Officer Margaret Jenkins, among others, may be a necessary step for Kohl's to steady the ship.
Kristina Stidham is the digital content manager at Total Retail and sister brand Women in Retail Leadership Circle. She is passionate about digital media and handles social media, video, and podcast production for both brands, as well as contributing articles and attending events. Kristina holds a B.A. in Media Studies and Production from the Temple University Klein College of Media and Communication in Philadelphia.