Embattled retailer Kohl’s has engaged with more than 20 solicited and unsolicited potential acquirers in the past couple months, through its advisor Goldman Sachs, with some being given access to a data room and management and invited to submit offers, the company said in an SEC filing.
Last month, Kohl’s rejected takeover bids it had received in January, saying they undervalued the company; one of them priced the company at about $9 billion.
At the same time, the company is fending off heat from activist investor Jonathan Duskin, managing partner for Macellum Capital Management, who is calling for a complete makeover of the board in an effort to steer the company toward a path of profitable growth. Macellum holds a 5% stake in Kohl’s.
“While management celebrated its success and made dismissive excuses about the company’s considerable loss of market share to its retail peer group, we see the fourth quarter fiscal year 2021 results through a different lens,” Duskin said in a statement to the Milwaukee Journal Sentinel. “We remain skeptical of Kohl’s’ future with the current board of directors and management configuration.”
During an investor day presentation last week, Kohl’s CEO Michelle Gass said the company is banking its future on, among other things, opening 100 smaller-format stores over the next four years, a store-within-a-store partnership with Sephora expected to net $2 billion a year and a focus on active and casual apparel. Kohl’s plans to add 400 new Sephora shops this year, with a goal of getting to 850 by the end of next year.
“Kohl’s is undergoing a significant transformation of our business model and brand to be the retailer of choice for the active and casual lifestyle,” said Gass, during the presentation. “We have fundamentally restructured our business to drive sustainable and profitable growth, while providing a strong return to shareholders. We have laid the foundation for our winning strategy and have started to implement key initiatives that will scale and accelerate our growth in the years ahead.”
For 2021, Kohl’s reported $19.4 billion in revenue, up 22.9% from 2020, and adjusted EPS of $7.33, with the company projecting net sales growth in 2022 of 2% to 3%. During the fourth quarter, more than 40% of ecommerce sales were fulfilled by stores, the company reported, with online revenue up 19% from 2019 but down 1% from 2020, representing 39% of the topline.
Duskin remained unimpressed, saying revenue has hovered around the same number for years.
“If you’re talking about low single digit sales growth, remember (Kohl’s has not) been able to grow same-store sales for a decade,” he told Yahoo Finance interviewer Brian Sozzi. “They didn’t grow same-store sales last year when almost every retailer without exception grew versus 2019 in what was one of the most robust consumer environments we’ve had in a long time. It’s hard to build out a financial model where that’s credible.”