Earlier this year, as Kohl's Corporation (KSS) was trying to find a buyer, an activist investor group tried and failed to win approval for replacing ten of Kohl's directors.
At the annual meeting in May investors rebuffed the idea, keeping its board intact.
Then, in July, Kohl's changed direction and decided not to sell. Investors had favored the sale to Franchise Group (FRG) and shares fell on the news it was not going to happen.
"Despite a concerted effort on both sides, the current financing and retail environment created significant obstacles to reaching an acceptable and fully executable agreement," Kohl's said at the time. "Given the environment and market volatility, the board determined that it simply was not prudent to continue pursuing a deal."
Now the activist investors, Macellum Advisors, led by managing partner Jonathan Duskin, are back, calling once more for aggressive action.
Macellum Is Trying Again
The activist investor group that owns about 5% of Kohl's issued a letter Oct. 13 urging a refresh of the struggling department store's board of directors including the removal of chairman Peter Boneparth.
An open letter written by Duskin and addressed to fellow shareholders, lists what it perceives as Kohl's 2022 financial shortcomings. It then explains that Macellum has recently been attempting to work behind the scenes with Kohl's on board shake-up plans.
"The facts supporting the case for immediate Board change at Kohl’s has become abundantly clear to us," the letter states. "In an effort not to be a distraction, we have attempted to work privately with the board over the past two-and-a-half months to explore a plan that includes replacing several long-tenured directors with independent, qualified retail experts."
Boneparth rebuffed those efforts and Kohl's is also rejecting the new push for board replacements.
Kohl's said the interactions with Macellum over the past two years have been "unproductive and a distraction from running the business," Reuters reported. The retailer said it was disappointed with Macellum's renewed efforts, calling the action a "disruptive public campaign."
Duskin Urges Change Immediately
In the letter, Duskin makes it clear he doesn't want to wait until the next annual meeting to make the move.
"We believe that had the true degree of business deterioration, senior executive departures and flawed sale process been known by shareholders at the time of the 2022 Annual Meeting, there may have been a different outcome, which is why we write today," the letter says. "We believe there is an urgent need for change now, rather than waiting another eight months for another contested election at the 2023 Annual Meeting."
Duskin also takes direct aim at Boneparth.
"We believe Chairman Boneparth and the Executive Committee have demonstrated an inability to effectively address the Company’s problems and seize on its opportunities," he writes.
The letter then rehashes some 2022 history and criticizes the failed sale attempt.
"Earlier this year, these individuals seemed content to attribute all of the Company’s post-pandemic reopening success to their own initiatives, even though we believe Kohl’s was actually just benefiting from economic tailwinds and none of the Company’s executional issues have been resolved," it states bluntly.
"However, these same directors appear to assume no accountability for rejecting offers to buy the Company at prices well above $60 per share in January 2022 (after denying there were even any buyers for the Company). These directors then oversaw a slow moving and seemingly flawed sale process that collapsed this summer following months of foreseeable financing market deterioration."
