Activist investors are reportedly trying to take control of Kohl's board, after the chain lost $500 million in 9 months

  • Activist investors nominated nine people to Kohl’s 12-person board, the WSJ reported.
  • The investors want Kohl’s to add directors with retail experience and reduce inventory, sources said.
  • The retailer reported a net loss of $506 million in the nine months to October 31, 2020.
  • Visit the Business section of Insider for more stories.

A group of activist investors with about 9.5% stake in Kohl’s is attempting to take control of the department store chain’s board, The Wall Street Journal reported on Sunday.

Investors including Macellum Advisors GP, Ancora Holdings, Legion Partners Asset Management, and 4010 Capital nominated nine people to its now-12-person board earlier this year, the newspaper said, citing people familiar with the matter.

These activist investors are calling on Kohl’s to take a range of actions, including adding directors with retail experience who can work with Michelle Gass, the company’s CEO.

They are also asking Kohl’s to consider a sale-leaseback of some of its more than $7 billion in non-core real estate, the Journal said, citing people familiar with the matter and a letter viewed by the outlet, which the group plans to send to shareholders.

Neither the size of the investors’ stake nor the board bid was previously known, WSJ said.

The group also is calling on Kohl’s to reduce inventory levels while making discounts and promotions easier for customers to follow, the newspaper added.

Kohl’s operating margin was already falling, and the pandemic has accelerated this. In its most recent filings, the retailer reported a net loss of $506 million in nine months to October 31, compared to a $426 million profit for the same period in 2019. 

A Kohl’s representative told Reuters that the company’s board and management team have been engaged in discussions with the investor group since early December and “remain open to hearing new ideas.”

The investor group’s nominees to Kohl’s board include Macellum CEO Jonathan Duskin and former Burlington Stores Inc CEO Thomas Kingsbury, according to the Journal.

This isn’t the first time Legion Partners, Macellum Capital Management, and Ancora Advisors have teamed up to put pressure on a retailer. 

In April 2019, they also released a brutal presentation slamming Bed Bath & Beyond’s leadership. Slide after slide of the presentation described different parts of the company that the activist investors believed to be “broken,” Insider’s Kate Taylor reported. 

In response, the company said it would cut approximately 7% of its corporate staff as part of its “business transformation,” following a review of its office cost structure.

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