Kohl’s is again under pressure to boost shareholder value

on Jan 18, 2022
  • Macellum Advisors wants Kohl’s Corp to either shake up its board or consider a sale to boost its business.
  • Jonathan Duskin of the activist investment firm says core operations at Kohl's need to be fixed immediately.
  • Shares of the Wisconsin-headquartered department store company have tanked nearly 20% in two months.

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Kohl’s Corp (NYSE: KSS) is up more than 5% in the stock market on Tuesday after Macellum Advisors said the retailer must take strategic actions to boost its share price.

What Macellum is proposing Kohl’s should do

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The activist investor wants Kohl’s to either shake up its board or consider a sale to boost its business. The push comes less than a year after it nominated two independent directors to the retailer’s board. On CNBC’s “Halftime Report”, Macellum’s Jonathan Duskin said:

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Two directors wasn’t enough change. It was another wasted year. Sales dramatically underperformed the sector. They aren’t even growing versus 2019. The stock trades at one of the worst valuations. So, a lot more change is required before shareholders can generate returns here.

Kohl’s had settled with the activist investor in April 2021, and the stock has tanked about 20% since then. Last month, Engine Capital also proposed that Kohl’s sells itself to a private equity firm or separates its digital business.

Kohl’s reinstated dividend and increased stock repurchase

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Over the past ten months, the department store company has reinstated dividend, increased stock repurchase, and launched Sephora shops inside its stores to boost shareholder value. According to Duskin, however, it’s the core operations that need fixing.

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The core merchandise assortment and the value proposition is broken, and it needs help. It needs to be fixed immediately. Otherwise, the company will continue to lose market share every year. They have to fix the core operations of this business. That’s where they’re underperforming.

On the other hand, Kohl’s says it is disappointed in “unfounded speculations” in Macellum’s letter. The activist investor owns 5.0% of the Wisconsin-headquartered retail chain.

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