There’s a plot twist in the ongoing struggles at Kohl’s, with an activist shareholder group calling for the ouster of the retailer’s chief executive and its chairman.
In a letter sent to the company’s board of directors, Ancora, which owns 2.5% of Kohl’s stock, cites the “botched strategic review, credit downgrade, dramatic decline in sales, elevated costs and poorly received standalone plan.”
As a result, it says Michelle Gass, who has been CEO since 2018, “is no longer suited to lead” Kohl’s. And it also wants to see Peter Boneparth, chairman, replaced.
The group says it has spent the last 18 months privately making its recommendations. “We thoughtfully withheld public critiques during this period to provide Kohl’s time to bounce back from the COVID-19 pandemic, conduct a productive review of strategic alternatives and produce a viable standalone plan that investors could rally behind,” it says.
It says the company, based in Menomonee Falls, Wisconsin, hasn’t delivered on these goals. “We contend that Kohl’s needs new leadership with demonstrated experience in cost containment, margin expansion, product catalog optimization and, most importantly, turnarounds,” the letter continues.
Kohl's disagrees. "The Kohl’s Board unanimously supports Michelle Gass and her leadership team," it says in an email statement. "We remain committed to maximizing value and acting in the interests of all our shareholders by staying focused on running the business, and the Board continues to actively engage with management to navigate the current retail environment.
In July, Kohl’s concluded a lengthy strategic review, ultimately rejecting potential offers. "In doing so, it has destroyed billions of dollars in equity value and painted the company into a corner.”
In August, Kohl’s reported a second-quarter sales decline of 8.5% to $4.09 billion, with net income falling 60% to $143 million. It says that for the full year, it now anticipates a sales decrease of between 5% and 6%.
The company attributed that weakness to the macroeconomic environment, with consumers cutting back on discretionary spending.
But Ancora, which is based in Cleveland, disagrees. “Kohl’s has recently failed to keep up with peers like Macy’s Inc. and Dillard’s Inc, with its net sales and same store sales declining as costs remain elevated.”