Activist investor Macellum Capital Management is back at attacking the underdeveloped Kohl’s Store (KSS) retailer less than a year after a settlement agreement was reached.
In a scathing new letter Tuesday, Maselum said Coles is a company “without accountability” and the executive team is “unable” to develop the right assortment and value proposition that resonates with shoppers.
“The Kohl board needs a room shareholder with a sense of urgency,” Jonathan Doskin, Macellum’s managing partner, said on Yahoo Finance Live. “There is a sense of entitlement on the board and also combined with complacency.”
Back in April 2021, Cole settled with an activist group led by McKillum. The settlement included reshuffling the board of directors and approving a new $2 billion share buyback plan.
Macellum stresses that this is about Kohl’s doing nothing to increase shareholder value, noting that the stock price has fallen 22% since the two reached a settlement on April 13.
The activist investor is pushing for a board update and for Kohl’s to pursue strategic alternatives such as dismantling its e-commerce operations, selling the company or selling its billions of dollars in real estate.
Duskin thinks Kohl’s is easily worth $100 a share if he’s really going to sign off on these value-creating moves. Kohl’s shares are currently trading at $50.
“The Kohl Board of Directors and management team are constantly considering all opportunities to maximize shareholder value. Our strong performance in 2021 shows that our strategy is gaining momentum and delivering results. We value the ongoing dialogue we are having with our shareholders and look forward to the scheduled month of March,” a spokeswoman for Kohl said. Yahoo Finance via email: “Day 7 for investors during which we will share more details about our strategic initiatives and capital allocation plans.”
Kohl’s did not respond to a further email request to make CEO Michael Gass available for an interview to respond to Duskin’s allegations.
Kohl’s is definitely in trouble now.
Along with Macellum, Engine Capital launched a new activist attack on Kohl’s a few weeks ago. In its highly worded letter, Engine Capital is asking Kohl to consider selling out entirely or splitting her online business (similar to what activist investor Jana is asking Macy to do).
Both groups of activists have a strong case.
While Kohl’s has earned favorable headlines for its partnerships with Amazon (for store revenue) and more recently cosmetics giant Sephora, the company simply hasn’t delivered on several fronts. Operating margins and sales growth have fallen short of many competitors since Gass took over as CEO in May 2018.
Kohl’s shares are up 6% over the past two years, underperforming the S&P 500 by 38%. Target stock is up 88%, while Macy’s stock is up 45%.
Brian Suzy He is a traveling editor and Announcer at Yahoo Finance. Follow Suzy on Twitter Tweet embed and on LinkedIn.
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