Kerfuffle between Kohl’s, activists


I love a good public-company proxy fight, and an interesting one has been shaping up at Kohl’s Corp., the mid-priced department store chain.

While the activists looking to bring change to the retailer gave a bit of ground this week, I’ll still keep an eye on the action.

In pre-pandemic days, I often shopped Kohl’s for its store-brand and national names. At some point, though, the chain shifted gears, adding large and messy clearance sections to its stores.

I like a sale as much as anyone, but if I wanted to waste my time pawing through haphazardly arranged merchandise, there are other places to go.

The activists, of course, have larger beefs than clearance protocols. In a letter to shareholders this week, they pointed to weak sales trends, declining profits and a stock price that lags peers.

“Over the past decade,” they wrote, “the company has steadily lost market share to other retailers. Yet the board seems content performing just slightly better than the worst companies in retail. ‘Best of the worst’ is not a viable strategy, nor does it satisfy shareholders like us who are seeking long-term superior performance.”

The activists, who hold nearly 9.5 percent of the company’s common stock, include investment firms Macellum Advisors, Ancora Holdings, Legion Partners and 4010 Capital. Two years ago, three of the four similarly pushed for change at retailer Bed Bath & Beyond. 

According to information filed with regulators, the four firms had been talking individually to Kohl’s executives over the past few years, expressing concerns about company performance. In January, they got together and set their sights on winning seats on Kohl’s board, which has 12 members.

Initially, the activists offered nine new nominees; Kohl’s dangled the possibility of two board seats. Last week, the activists revised their number to five, to challenge five named incumbents “viewed as least qualified to continue.”

Kohl’s isn’t taking the challenge lightly.

While saying it is “continuing to engage in good faith with the activists,” the company nevertheless criticized the five nominees as lacking “critical relevant experience.” In a statement last week, Kohl’s also called out one nominee – but not by name – as having led four companies that filed for bankruptcy.

“We reject their attempt to disrupt Kohl’s strong business momentum,” the statement reads.

While Kohl’s annual meeting is likely to be virtual again this year due to the pandemic, no date has been set yet. Most years, it is held in mid-May.

That still leaves time for the sides to negotiate a settlement – or to continue to duke it out with missives to shareholders.

For the record, it should be noted that in the case of Bed Bath & Beyond, the activists won four seats on that 12-member board, spun off some holdings (including Christmas Tree Shops), and got the CEO to step down.

Marlene Kennedy is a freelance columnist. Opinions expressed in her column are her own and not necessarily the newspaper’s. Reach her at [email protected]

Categories: Business

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