Kohl’s Corp. is under fire by an activist investor again, this time it’s Ancora Holdings Group.
On Thursday, Ancora, which owns roughly 2.5% of Kohl’s shares, sent a letter to the board of directors advocating for a change in leadership of both the board chairman and chief executive officer.
The letter stated under chairman Peter Boneparth and CEO Michelle Gass, Kohl’s “lacks the right leadership for the exceedingly challenging period ahead, one that will require the company to reverse high-single-digit sales declines, contain capital expenditures and operating expenses, and immediately optimize fulfillment, marketing and merchandising.”
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Ancora said it has been speaking with leadership at the company for the past 18 months and giving recommendations to reverse the company’s underperformance.
“We thoughtfully withheld public criticism during this period to provide Kohl’s time to bounce back from the COVID-19 pandemic, conduct a productive review of strategic alternatives and produce a viable standalone plan that investors could rally behind,” the letter said.
“Much to our disappointment, Kohl’s has failed to deliver on each of these critical priorities.”
According to Ancora, the board’s decision to reject multiple offers to buy the company at $64-$65 per share has “destroyed billions of dollars in equity value and painted the company into a corner.”
“With a failed review of alternatives and recent credit downgrade now casting shadows over what is a shrinking business, we estimate that Kohl’s has begun to trade at a steep discount to its liquidation value,” Ancora said. “The onus is now on management to begin executing flawlessly against a backdrop that includes high inflation, intense competition and recessionary headwinds.”
Kohl’s did not provide an immediate response to the Ancora letter.
This is not the first time Kohl’s has had to manage an activist investor this year.
During the first half of the year, Macellum Capital Management waged a board takeover campaign and urged shareholders to vote for its candidates. In May, shareholders voted with Kohl’s to keep the board.
And while a takeover was averted, Kohl’s couldn’t shake the economic trends as it announced sales were down 8.5% in the second quarter as the company planned a $500 million stock buyback.
Kohl’s anticipates sales being down 5-6% for the year. But that projection hasn’t stopped interested companies from reaching out to Kohl’s.
Recent reports stated that Oak Street Real Estate Capital offered Kohl’s roughly $2 billion. The company has not commented on the offer.
At midday Thursday, Kohl’s stock was down 2.47% to $27.21.