Retail

Activist investor Macellum urges Kohl's to explore sale, other options

Key Points
  • Activist hedge fund Macellum Advisors said on Tuesday Kohl's should explore strategic options, including a sale, if the retailer does not improve its business to boost its stock price.
  • The investor said it planned to nominate a slate of director candidates at a shareholders meeting this year, confirming a Reuters report from December, unless Kohl's decides to work with it to implement certain changes.
  • In a statement, Kohl's said its strategy is working and it is "disappointed with the path they [Macellum] have taken and the unfounded speculation in their announcement and letter."

In this article

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Kohl's significantly underperformed its peers, says Macellum's Johnathan Duskin

Activist hedge fund Macellum Advisors said on Tuesday Kohl's should explore strategic options, including a sale, if the retailer does not improve its business to boost its stock price.

The push comes months after the department store chain reached a deal with a group of activist investors, including Macellum, agreeing to add two of the group's nominees to its board as independent directors.

Macellum said on Tuesday that Kohl's stock price had slid more than 20% since reaching that deal in April 2021, adding that the company had spent another year "materially mismanaging the business."

The investor said it planned to nominate a slate of director candidates at a shareholders meeting this year, confirming a Reuters report from December, unless Kohl's decides to work with it to implement certain changes.

Kohl's can optimize its balance sheet by monetizing $4 billion of its real estate and returning the proceeds to shareholders through a buyback, which could boost its stock to $100 apiece, Macellum said.

Kohl's said in a statement that it is "disappointed with the path they [Macellum] have taken and the unfounded speculation in their announcement and letter."

The retailer said its strategy is working. It pointed to growing sales and profitability in the fiscal third quarter and the launch of new initiatives, including Sephora shops inside of its stores. It said it has accelerated plans for share buybacks and already added new retail experts to its board, as part of its prior agreement with Macellum and other activist investors.

"Our Board and management team will continue to aggressively pursue the best interests of all shareholders as we manage the business to increase shareholder value in both the near- and long-term," it said in the statement.

Shares, which last closed at $47.77, rose about 6% Tuesday afternoon. The company's shares have risen nearly 16% over the past 12 months.

Macellum, which holds nearly 5% of outstanding Kohl's common shares, has previously brought about changes at Bed Bath & Beyond and Big Lots.

U.S.-based hedge fund Engine Capital LP last year also suggested Kohl's consider a sale of the company or separate its e-commerce division.

CNBC's Melissa Repko contributed to this report.