Customers leave a Kohl’s store on November 12, 2015 in San Rafael, California.
Justin Sullivan | Getty Images News | Getty Images
Kohl’s shares rose more than 9% in premarket trading Monday after a group of activist investors confirmed they had appointed nine directors to the company’s board of directors to turn the deal around and bolster the stock.
The group consisting of Macellum Advisors, Ancora Holdings, Legion Partners Asset Management and 4010 Capital together owns a 9.5% stake.
Investors want Kohl’s to add directors with extensive retail experience, cut executive pay, cut inventory, and consider selling some of its non-core properties. They estimate that real estate wealth could raise anywhere from $ 7 billion to $ 8 billion.
The group hopes to keep the share price more than double what it is now through a $ 3 billion real estate sale-leaseback program and an extensive share buyback program that was mailed to Kohl shareholders on Monday.
Kohl’s business was struggling even before the Covid pandemic when the retailer was selling customers to online players like Amazon and big box companies like Target and Walmart. However, especially in the past year, losses have increased as many Americans stayed home during the pandemic. Kohl’s total revenue declined 25% to $ 9.8 billion for the nine months ended October 31, while his losses were $ 506 million, compared to a profit of $ 426 million last year.
Current CEO Michelle Gass, a former Starbucks executive, took over from Kevin Mansell in 2018. Her initiatives include expanding an Amazon returns service in Kohl’s stores and adding hundreds of Sephora beauty salons to the stores, which will be launched this fall.
A Kohl’s spokeswoman told CNBC in an email that the retailer’s board of directors and its management team have been in discussions with the group of investors since early December.
“We are still open to new ideas,” she said. “Kohl’s is determined to increase shareholder value.”
The group’s nominees include Jonathan Duskin, Chief Executive of Macellum, Thomas Kingsbury, former CEO of Burlington Stores, and Margaret Jenkins, Chief Marketing Officer of Denny.
Legion, Macellum and Ancora previously teamed up to redesign the board at Bed Bath & Beyond.
At the close of trading on Friday, Kohl shares were up almost 20% year on year. With a market capitalization of around $ 8.3 billion, Kohl’s has grown larger than Nordstrom and Macy’s.
Kohl’s will announce its fourth quarter results on March 2nd.
Read the full letter from the investor group.