Asserts the Board and Management Lack Urgency and Bear Responsibility for Another Lost Year, With Kohl’s' Share Price Down More Than 20% Since Macellum’s April 2021 Settlement
Believes the Board Needs Additional Retail Sector Expertise and Shareholder Representation to Effectively Drive Operational and Financial Improvements and Oversee the Management Team
Contends That Kohl’s, Which Holds $7bn-$8bn in Real Estate Assets, Could Trade at up to $100 Per Share With an Optimized Balance Sheet and Improved Execution
Suggests Kohl’s Also Explores Strategic Alternatives, Including a Potential Sale to One of the Many Well-Capitalized Financial Sponsors Apparently Interested in the Company
Urges Shareholders to Recognize the Time for Meaningful Change is Now – Kohl’s Cannot Continue Falling Behind Peers and Losing Market Share Under Misaligned, Ineffective Leadership
NEW YORK, January 18, 2022--(BUSINESS WIRE)--Macellum Advisors GP, LLC (together with its affiliates, "Macellum" or "we"), which holds nearly 5% of the outstanding common shares of Kohl’s Corporation (NYSE: KSS)("Kohl’s" or the "Company"), today issued an open letter to its fellow shareholders to convey the following:
It was another lost year at Kohl’s. We believe the Company’s Board of Directors (the "Board") and executive leadership team have spent another year materially mismanaging the business and failing to implement necessary operational, financial and strategic improvements – contributing to a 22% share price decline from the point in which we settled with Kohl’s for two director designees in April 2021.1
The Board appears unwilling to address the drivers of long-term underperformance. We question how the Board could reject our recent offers to collaborate on a meaningful director refresh that would add retail sector expertise and shareholder perspectives to the boardroom, particularly in light of the Company's continued underperformance.
We plan to nominate a slate of director candidates if the status quo persists. We intend to nominate a slate of highly-qualified and independent candidates for election at the 2022 Annual Meeting of Shareholders unless the Board decides to collaborate with us on a director refresh and promptly implement changes to improve operational execution and optimize the balance sheet. Even using a historically low PE multiple of ~7x-8x, our analysis indicates a properly optimized balance sheet (e.g. by monetizing $4 billion of its real estate and returning the proceeds to shareholders through a buy-back program) could translate to at least $100 per share.
If the Board is unwilling to pursue improvements, it should explore strategic alternatives. We believe there are well-capitalized strategic and financial buyers that could pay a meaningful premium to acquire Kohl’s. We also see value-creation potential in separating the Company’s ecommerce and brick-and-mortar businesses. In the event the Board wants to continue rejecting our thoughtful suggestions, it should retain qualified advisors to support an objective evaluation of these options as well as any offers for the Company that have been made to date.
The complete version of Macellum’s letter can be downloaded and viewed here.
Macellum Capital Management is an activist investment firm, with deep expertise in the retail and consumer sectors, founded in 2009 by Jonathan Duskin. Macellum invests in undervalued companies that it believes can appreciate significantly in value as a result of a change in corporate strategy or improvements in operations, capital allocation or corporate governance. Macellum’s investment team, advisors and network of industry experts draw upon their extensive strategic, operating and boardroom experience to assist companies in designing and implementing initiatives to improve long-term shareholder value. Macellum prefers to constructively engage with management to improve its governance and performance for the benefit of all stockholders. However, when management is entrenched, Macellum has run successful proxy contests to effectuate meaningful change. Macellum has run successful election contests to effectuate meaningful change at many companies, including at The Children’s Place Inc., Citi Trends, Inc., Bed Bath and Beyond and Big Lots, Inc. Learn more at www.macellumcapitalmanagement.com.
Certain Information Concerning the Participants
Macellum Badger Fund, LP, a Delaware limited partnership ("Macellum Badger"), together with the other participants named herein, intends to nominate director candidates and file a preliminary proxy statement and accompanying WHITE proxy card with the Securities and Exchange Commission ("SEC") to be used to solicit votes for the election of its slate of highly-qualified director nominees at the 2022 annual meeting of shareholders of Kohl’s Corporation, a Wisconsin corporation (the "Company").
MACELLUM BADGER STRONGLY ADVISES ALL SHAREHOLDERS OF THE COMPANY TO READ THE PROXY STATEMENT AND OTHER PROXY MATERIALS AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. SUCH PROXY MATERIALS WILL BE AVAILABLE AT NO CHARGE ON THE SEC'S WEB SITE AT HTTP://WWW.SEC.GOV. IN ADDITION, THE PARTICIPANTS IN THIS PROXY SOLICITATION WILL PROVIDE COPIES OF THE PROXY STATEMENT WITHOUT CHARGE, WHEN AVAILABLE, UPON REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO THE PARTICIPANTS' PROXY SOLICITOR.
The participants in the proxy solicitation are anticipated to be Macellum Badger, Macellum Badger Fund II, LP, a Delaware limited partnership ("Macellum Badger II"), Macellum Advisors, LP, a Delaware limited partnership ("Macellum Advisors"), Macellum Advisors GP, LLC, a Delaware limited liability company ("Macellum GP") and Jonathan Duskin.
As of the date hereof, Macellum Badger directly beneficially owns 216,204 shares of Common Stock, $0.01 par value per share, of the Company (the "Common Stock"), including 1,000 shares in record name. As of the date hereof, Macellum Badger II directly beneficially owns 6,738,528 shares of Common Stock. As the investment manager of Macellum Badger and Macellum Badger II, Macellum Advisors may be deemed to beneficially own the 216,204 shares of Common Stock beneficially directly owned by Macellum Badger and 6,738,528 shares of Common Stock beneficially owned directly by Macellum Badger II. As the general partner of Macellum Badger, Macellum Badger II and Macellum Advisors, Macellum GP may be deemed to beneficially own the 216,204 shares of Common Stock beneficially owned directly by Macellum Badger and 6,738,528 shares of Common Stock beneficially owned directly by Macellum Badger II. As the sole member of Macellum GP, Mr. Duskin may be deemed to beneficially own the 216,204 shares of Common Stock beneficially owned directly by Macellum Badger and 6,738,528 shares of Common Stock beneficially owned directly by Macellum Badger II.
1 Share price decline reflects the period beginning April 13, 2021 and running through January 17, 2022.
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