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Activist investor attacking Kohl’s take another jab at retailerApr 4th, 2022 14:06 EST
“We are writing to you regarding your decision to run what appears to be a flawed and opaque review of strategic alternatives. In all of our years investing in the public market, we have never seen a corporate leadership team operate in a more defensive and insular manner when many shareholders seem very supportive of a sale and various suitors have expressed interest. Perhaps this is why the company’s shares have the rare distinction of trading almost 15% below announced and reported offers,” Macellum Capital Management managing partner Jonathan Duskin said in an open letter to Kohl’s board on Monday.
Duskin takes Kohl’s to task for dragging out a sale process, which sources have told Yahoo Finance includes several bidders.
Added Duskin, “At this point, we believe the Board has eroded all of its credibility with shareholders. A number of sizable shareholders have informed us that they are extremely frustrated with the Board’s poorly communicated process, which has followed two decades of perpetual stagnation. Perhaps this is why the Company’s most recent letter to shareholders was focused on disparaging us and full of seemingly false and misleading statements.”
To be sure, this battle has reached new levels of intensity as Kohl’s gears up for its annual meeting in May.
In one corner are noted activist investors Macellum Capital Management and Engine Capital. In the other, the long underperforming executive team at Kohl’s.
Kohl’s continues to indicate it isn’t going quietly into the private market sunset.
The struggling retailer rejected two buyout offers in January and then enacted a poison pill to thwart perceived low-ball bids. Then in early March, Kohl’s held an investor day to try and hype up management’s turnaround efforts.
The off-mall retailer said it aims to generate $2 billion in sales by opening 850 Sephora cosmetics shops inside of its stores. The company added it will shoot for opening 100 small format Kohl’s stores over the next four years.
As for long-term guidance, Kohl’s sees low-single digit percentage sales growth and mid- to high-single digit EPS growth.
Kohl’s shares promptly crashed 12% on its March 7 investor day.
Even while having a weak hand, Kohl’s has ratcheted up its attacks on Duskin (in what some pros would say is a show of that weak hand).
“The choice is clear: Re-elect the Kohl’s Board, which has the right skills and expertise to drive our strategy forward while evaluating any value-creating opportunities, or elect Jonathan Duskin and his associates to destroy value in the strategic alternatives process or as operators,” Kohl’s said in a letter last week mailed to shareholders.
The company doubled down on its attack on Duskin Monday.
“The Kohl’s Board will not allow Macellum’s ill-informed commentary and push for a quick sale at any price to drive process decisions. The Board is thoughtfully and thoroughly evaluating proposals to realize full and fair shareholder value and weighing those against the value-creation potential of a compelling strategic plan. Kohl’s Board is far more qualified to direct this process than Macellum and its slate of nominees, over half of whom have never served on a public company board and none of whom have served on a board of a retail company approaching the size of Kohl’s,” a Kohl’s spokesperson told Yahoo Finance via email.