Kohl’s Receives Demand Letter From Investor Group Following Unsuccessful Sale, Adding Pressure to Close More Locations

Joel Eisenberg

The investor entity blames the superchain’s corporate office for abject mismanagement.

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Kohl’sCorporate.Kohls.com

Author’s Note

This article is based on corporate postings and accredited media reports. Linked information within this article is attributed to the following outlets: Reuters.com, Google.com, SeekingAlpha.com, and BusinessWire.com.

Introduction

I have written extensively about the Kohl’s department store chain for NewsBreak, particularly of late regarding their recent unsuccessful sale to Franchise Group. See here for “Plans For Kohl’s Closings in 2022 Update: Sales Negotiations Terminated,” as but one example.

As excerpted from the article, which quoted a Reuters.com release: U.S. department store chain Kohl's Corp (KSS.N) on Friday called off its sale to Franchise Group (FRG.O) after months of negotiations, citing sinking markets and difficult financing conditions. Kohl's shares, already down 28% since January, tumbled nearly 15% in pre-market trading on news of the collapsed talks and the retailer's shrinking sales. "Given the environment and market volatility, the board determined that it simply was not prudent to continue pursuing a deal," Peter Boneparth, Kohl's board chairman, said in a statement.

Since news of the sales termination was reported, Kohl’s has continued to fall in market value, leaving many analysts, as a targeted Google search will verify, to question the chain’s longevity.

Let us explore further.

Kohl’s, 2022

According to a September 24 article from SeekingAlpha.com, “Kohl's: The End Of The Department Store Era Draws Close,” the prognosis for the survival of the Kohl’s chain has of late been downgraded: Like many department stores, Kohl's faces rising input costs while consumer retail demand declines. Kohl's recently lost its investment grade credit rating, meaning its interest costs may rise significantly upon its 2023 debt maturities. Persistent lockdowns in China are causing growing apparel and footwear cost pressures that may lower Kohl's already thin profit margins. Kohl's ended last quarter with high inventories and low cash, so its winter sales must be strong to maintain its liquidity position.

BusinessWire.com, on behalf of Angora Holdings, issued the following press release on September 22: “Ancora Sends Letter to the Board of Directors of Kohl’s Regarding the Need for a New Chairman and Chief Executive Officer with Turnaround Experience.”

The release was angry in tone. Its subtitle was written in the form of a summary, and stated (utilizing upper-case lettering as reproduced here):

  • Believes the Company’s Botched Strategic Review, Credit Downgrade, Dramatic Decline in Sales, Elevated Costs and Poorly Received Standalone Plan Have Placed Kohl’s on a Dangerous Trajectory – With Share Price Down 45% Over the Past Year
  • Contends the Board’s Actions Have Created an Environment in Which CEO Michelle Gass is No Longer Ideally Suited to Lead Kohl’s to Long-Term Value Creation
  • Urges the Board to Appoint a New Chairman and Announce a CEO Succession Plan That Accounts for Interviewing a Diverse Group of Qualified Candidates with Experience Turning Around Retailers

The release went on, demanding a replacement of many C-Suite employees.

Conclusion

Kohl’s is presently in the midst of its most financially challenging period since its inception, and has been reported, per the above, as likely to shutter further underperforming locations as part of its strategy moving forward.

In the event of any updates I will report them here, on NewsBreak.

Thank you for reading.

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I am an award-winning author, screenwriter for film and television, and producer. My mission on News Break is to share socially important perspectives on both culture and pop-culture. Member of PEN America, and the WGA.

Northridge, CA
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