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Kohl's pushes back on investor group's takeover efforts

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Kohl’s is fighting back against an investor group’s efforts to take control of the department store chain’s board, arguing that it would derail its progress and momentum.

The response, issued Monday, comes after the investor group said it had nominated nine members for Kohl’s board of directors as it looks to boost the company’s stock and its financial performance. The group owns a 9.5% stake in Kohl’s.

Kohl's, Nordstrom offers mixed picture for holiday quarter

In a letter to shareholders made public on Monday, the investor group said Kohl’s hasn’t kept up with the fast-changing retail landscape and needs to cut its inventory, fix its store label assortment, cut expenses and improve its app and website among other things.

The investor group is made up of Macellum Advisors, Ancora Holdings, Legion Partners Asset Management and 4010 Capital.

Kohl’s, which is based in Menomonee Falls, faced challenges even before the COVID-19 pandemic forced the chain and its peers to close temporarily last spring. The retailer was wrestling with increasing competition from online players like Amazon and discounters like Target and Walmart, both of which have been sprucing up their assortments.

But the pandemic has accelerated shoppers’ shift online and increased the dominance of stores like Walmart, which offer one-stop shopping. The department store chain has said that expects to report that its most-recent quarter saw another steep drop in sales at stores opened at least a year, a key measure of a retailer’s health.

The investor group said it believes that Kohl’s problems are fixable, but will require a high-powered board with relevant expertise and experience that “does not shy away from its oversight role and will hold management accountable.”

Its nominees include Margorie Bowen, who has served as a director at more than a dozen public and privately held companies. It also includes Jeffrey A. Kantor, president of JAK Consulting, a firm focused on retail and wholesale.

Kohl’s said its management team and board have been in discussion with the investor group since early December and it remains open to new ideas that will improve its performance. However, it said attempts to seize control of the board would “disrupt” its momentum.

Kohl’s added that it was the first time the group shared any details of their plans, and it noted that the company’s plans already include several initiatives forwarded in the group’s proposal. Other ideas the group is pushing “would not be accretive to shareholder value,” Kohl’s added.

“The company’s board and management will continue to engage with the investor group with the goal of identifying new ideas that could enhance shareholder value,” Kohl’s said in its statement.

Kohl’s is set to post its results for its quarter that ended Jan. 30 on Tuesday.

Shares rose more than 6%, or $3.27, to close at $55.97 on Monday. However, the price had settled back to $54.44 at the close Thursday. Kohl’s shares have risen more than 25% in the past 12 months.

Fave 5: Business reporter Shelley K. Mesch reflects on 2020 coverage

I expected this year to write about mostly about local startups, high-tech companies and venture capital investments. While I got to do some of that, much of my work load has been taken over by the effects of COVID-19 on the economy.

It's been a year of a lot of unknowns and a lot of fears in the business world. Owners and managers worried about keeping revenue up and maintaining a safe environment for employees. Many of them wondered how long they could stay open, and quite a few of them decided to make the hard choice and close their doors.

But there have been some bright spots. Early on, manufacturers around Wisconsin and even nationwide stepped up to meet the needs of medical professionals battling the virus face-to-face. Distillers made hand sanitizer, manufacturers started producing personal protective equipment and design engineers made plans for face shields available for free. Many of Dane County's health-related companies also joined the fight, including Promega and Catalent ramping up production on components for tests and treatments, Exact Sciences using its labs to run COVID-19 tests and Epic Systems developing software to track cases.

I did also take some time to write about my favorite, money-grubbing tanuki from Animal Crossing: New Horizons, the runaway hit video game.

Working from my makeshift home office can be difficult, but I'm glad I get to do this work reporting on Wisconsin and its businesses. There are plenty of political arguments about what COVID-19 is doing to business, but I am here to take out those politics and share with readers what the companies and their employees are actually experiencing. I hope that in a few months I will be telling you how businesses and the local economy are recovering from the pandemic.

If you want to read my other stories, you can find them here.


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