Is Kohl’s Facing a Proxy Fight Again?
An activist could be after Kohl’s again.
Word surfaced Tuesday that Kohl’s Corp. could be the target of an activist seeking to get on the board so it can push for a sale of the company.
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Kohl’s share price closed on Tuesday at $26.80, up $1.25 or nearly 4.9 percent, versus the prior close. The uptick followed a Reuters report that activist hedge fund Vision One Management Partners not only has built a stake in the retailer, but that it also asked Kohl’s to launch a sale process as well as give it board representation, citing unnamed sources.
Neither Vision One nor Kohl’s responded to a request for comment by press time.
With an activist pushing for the retailer to sell itself, Kohl’s shareholders might be wishing that its sold back in 2022 when it had the chance.
The Menomonee Falls, Wisc.-based department store retailer first received takeover interest in January 2022. Acacia Research, backed by activist hedge fund Starboard Value, was behind a $9 billion offer valuing the retailer at $64 a share. Kohl’s at the time was eyeing a $70 a share price tag.
Eventually, the retailer and Franchise Group were in exclusive talks for a deal valued at $7.74 billion, or $60 a share. But as talks dragged, the Vitamin Shoppe owner was believed to be lowering its offer to closer to $50 a share. Kohl’s eventually rejected Franchise’s $6.84 billion offer, or $53-a-share. It cited current financing and a retail backdrop that saw declining consumer spending on fears of a U.S. recession as contribution to the trip-up in negotiations. Kohl’s shares were trading in the $35 range, but fell to $29 when word surfaced that the potential deal collapsed.
Now the shares are worth even less. And the retail landscape is no better, with consumers and companies hurt by persistent inflation.
Kohl’s has been having a tough time, and it’s still waiting for its goal to become the nation’s destination for active and casual apparel to bear fruit. For the third quarter ended Oct. 28, the retailer posted a 39.2 percent decline in net income to $59 million, or 53 cents a diluted share, on a 5.2 percent decrease in net sales to $3.84 billion. The second quarter saw a 59.4 percent drop in net income to $58 million, or 52 cents a diluted share, on a 4.8 percent decrease in net sales to $3.68 billion. For the first quarter, net income was flat at $14 million, or 13 cents a diluted share, on a 3.3 percent decrease in net sales to $3.36 billion. Former CEO Michelle Gass left in December 2022 to become president and CEO-to-be at Levi Strauss & Co.. Kohl’s named Tom Kingsbury its permanent CEO, after having served as interim CEO following Gass’ departure, in February 2023. Kingsbury was one of three new directors added to Kohl’s board in 2021 as part of a settlement by the retailer with activist investors to avoid a proxy fight.
Based in Miami, Fla., Vision One’s cofounders are former Canadian Prime Minister Stephen Harper and Courtney Mather, previously a portfolio manager at Icahn Capital. Harper is chairman and Mather is CEO, according to the company website.
Activists have become active in retail again. Macy’s, which is laying off 2,300 jobs, last month rejected a $5.8 billion bid from Arkhouse Management and Brigade Capital to take the retailer private. And Ancora Holdings, one of the activists that got Kingsbury on the Kohl’s board in 2021, is now leading a group of investors who want change at railroad operator Norfolk Southern, including an overhaul of the majority of the company’s board and the ouster of CEO Alan Shaw.
