The management team is “unable” to create value in the company

“The Kohl board needs a shareholder in the room who has a sense of urgency,” Macellum managing partner Jonathan Duskin said on Yahoo Finance Live. “There is a sense of entitlement on the board and also combined with complacency.” In a scathing new letter Tuesday, Macellum says Kohl’s is a “liabilityless” company and that the management team is “unable” to develop the right assortment and value proposition that resonates with shoppers.

Macellum argues that Kohl’s has done nothing to increase shareholder value, pointing to a 22% drop in share price since the two reached an agreement on April 13.

In April 2021, Kohl settled down with an activist group led by Macellum. The settlement involved a reshuffle of the board of directors and the approval of a new $2 billion share buyback plan.

The activist investor is pushing for a refresh of the board and for Kohl’s to pursue strategic alternatives such as spinning off its e-commerce operations, selling the business, or disposing of billions of dollars of real estate it owns. ‘she owns.

Duskin thinks Kohl’s is easily worth $100 a share if he were to really endorse these value-creating moves. Kohl’s shares are currently trading at $50.

“Kohl’s Board of Directors and management team continually review all opportunities to maximize shareholder value. Our strong performance in 2021 demonstrates that our strategy is gaining momentum and delivering results. We appreciate the ongoing dialogue we have with our shareholders and look forward to our Investor Day scheduled for March 7 where we will share more details about our strategic initiatives and capital allocation plans,” said a door. Kohl’s word to Yahoo Finance via email.

Kohl’s did not respond to another email request that CEO Michelle Gass be available for an interview to respond to Duskin’s claims.

The entrance to the Kohl’s store at one of their locations in the South San Francisco Bay Area; Kohl’s is an American chain of stores

The story continues

To be sure, Kohl’s is in deep trouble right now.

In addition to Macellum, Engine Capital launched a new militant attack on Kohl’s a few weeks ago. In its own letter, Engine Capital asks Kohl’s to consider selling it all or spin off its online business (similar to what activist investor Jana is begging Macy’s to do).

Both groups of activists have a strong case.

While Kohl’s has garnered favorable headlines for its partnerships with Amazon (for in-store returns) and more recently cosmetics giant Sephora, the company has simply not delivered on several fronts. Operating margins and sales growth have lagged many rivals since Gass took over as CEO in May 2018.

Kohl’s shares are up 6% over the past two years, underperforming the S&P 500’s 38% gain. Target shares are up 88%, while Macy’s has seen a 45% improvement.

Brian Sozzi is an editor and presenter at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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