Kohl's activist group reduces its proposed board of directors, disregards aim for control.
Kohl's, the American department store chain, has been at the centre of a tussle between its board and a group of activist investors. The investor group, which includes Macellum Advisors, Ancora Holdings, Legion Partners Asset Management, and 4010 Capital, filed a revised proxy statement with the Securities and Exchange Commission on March 11, 2021.
The investor group, holding a 9.5% stake in Kohl's, has been critical of the company's latest earnings report. They argue that the Board seems content with performing just slightly better than the worst companies in retail and that a refreshed Board is needed to develop a robust roadmap to compete for market share. In response, the investor group has proposed nominating five directors instead of nine, as they view five of Kohl's current directors as least qualified to continue serving on the Board.
However, Kohl's has pushed back against these demands. On February 17, the company publicly responded to the activist group's demands, and on March 9, Kohl's released a defense of its board. Kohl's CEO Michelle Gass, CFO Jill Timm, and others had a conference with Bank of America Merrill Lynch analyst Lorraine Hutchinson on March 9 to discuss the matter.
The investor group has taken issue with certain financial decisions made by Kohl's, particularly a $600 million in unsecured debt due in 2025, at 9.5% interest, that Kohl's took on in April. The group has labelled the borrowings "poorly negotiated," including the 9.5% interest rate and a make-whole call premium of $224 million.
Kohl's has defended its board and business momentum, stating that the activists' proposals threaten to disrupt Kohl's business. The company's focus, according to its press release, is on sustainable operating and financial success, not short-termism and financial engineering at the expense of long-term growth.
Despite these developments, Kohl's fourth quarter and full-year sales and margin declines were reported in the latest earnings report, with the quarter being profitable but the year showing an operating loss of $262 million.
However, the recent surge in Kohl's stock price is mainly due to retail trader speculation and short squeeze activity rather than coordinated activist investor campaigns pushing for strategic change or restructuring at the company. Nearly half of Kohl's outstanding shares are shorted, attracting day traders and social media-driven momentum rather than fundamentals-based activist intervention.
Analysts still warn that Kohl's faces fundamental challenges, including expected sales declines and losses for 2025–2026, with no concrete turnaround plans announced by activists as of now. Despite earlier hopes from some investors in April that activist investor interest or a buyout could boost share value, no major public announcement of activist campaigns or proposals has been made as of mid-2025.
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- The activist investor group, including Macellum Advisors, Ancora Holdings, Legion Partners Asset Management, and 4010 Capital, called for a refreshed board at Kohl's to develop a robust roadmap for market competition, proposing to nominate five directors.
- Kohl's, under its CEO Michelle Gass and CFO Jill Timm, defended its board and business momentum, arguing that the activists' proposals threaten to disrupt the company's focus on sustainable operating and financial success.
- The investor group criticized certain financial decisions made by Kohl's, labeling a $600 million unsecured debt due in 2025 as poorly negotiated, with a 9.5% interest rate and a make-whole call premium of $224 million.
- Changes in Kohl's stock price are primarily driven by retail trader speculation and short squeeze activity, with nearly half of the company's outstanding shares shorted.
- Despite the surge in Kohl's stock price, analysts warn of expected sales declines and losses for 2025–2026, with no concrete turnaround plans announced by activists.
- As of mid-2025, no major public announcement of activist campaigns or proposals has been made regarding strategic change or restructuring at Kohl's, contrasting earlier expectations of a buyout or activist investor interest boosting share value.
