Macellum Capital Management is back on the attack against Kohl's KSS, the lagging department store retailer, less than a year after reaching a settlement.
In a scathing new letter on Tuesday, Macellum says Kohl's is a company without accountability and the executive team is incapable of developing the right assortment and value proposition that resonates with shoppers.
Jonathan Duskin, Macellum managing partner, said that the Kohl's board of directors needs a shareholder in the room that has a sense of urgency. There is a sense of entitlement and complacency on the board. In April 2021, Kohl settled with an activist group led by Macellum. A board shakeup and approval of a $2 billion stock buyback plan were part of the settlement.
Macellum contends that Kohl's hasn't done anything to drive shareholder value, pointing to a 22% plunge in the stock price since the two reached a settlement on April 13.
The activist investor is pushing for a board refresh and for Kohl's to pursue strategic alternatives such as spinning off its e-commerce operations, selling the company, or spinning off billions of dollars of real estate it owns.
Duskin thinks Kohl's is worth $100 a share if it were to sign off on these value creating moves. The board and management team at Kohl always look for opportunities to maximize shareholder value. Our strategy is gaining traction and driving results in 2021, based on our strong performance in 2021. Kohl's didn't respond to another email request to make CEO Michelle Gass available for an interview to respond to Duskin's claims.
Kohl's is in a pickle right now, and that's for sure.
A new activist attack was launched by Engine Capital on Kohl's a few weeks ago, besides Macellum. In its letter, Engine Capital demands Kohl's consider a sale in its entirety or splits off its online business similar to what activist investor Jana is asking Macy's to do Both sets of activists have a strong case.
Kohl's has received favorable reviews for its partnerships with Amazon for store returns and Sephora for more recently, but the company has not delivered on several fronts. Since Gass took over CEO in May 2018, operating margins and sales growth have lagged many rivals.
Kohl's shares have gone up 6% over the past two years, underperforming the S&P 500's 38% gain. Target's stock is up 88%, while Macy's stock is up 45%.
Brian Sozzi is an editor at large and anchor at Yahoo Finance. You can follow Sozzi on Twitter and LinkedIn.