NEW YORK (AP) — 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.
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 faced challenges even before the 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, which is based in Menomonee Falls, Wisconsin, is set to post its results for its quarter that ended Jan. 30 on March 2.
Shares rose more than 6%, or $3.27, to close at $55.97 on Monday. The shares have risen more than 26% in the past 12 months.