Kohl’s Provides Update on Turnaround Effort; Investor Group Cuts Director Nominations from 9 to 5


Update: Kohl’s has rejected the new, smaller slate of directors put forth by activist investors. The retailer stated that one of the nominees “presided over four companies that filed for bankruptcy,” and three “have not served on boards of retail companies of a comparable size to Kohl’s.” Additionally, three “have never served on a public company board” and four of the five “lack meaningful digital experience,” which is an area that now represents 40% of Kohl’s total business.

“Regardless of whether the activists are nominating five or nine directors, their capabilities and track records simply do not measure up,” said Kohl’s in a statement. “Shareholders should reject the efforts of this slate to impose short-termism and financial engineering to disrupt the Kohl’s business strategy and our ongoing momentum.”

The activist investor group seeking to shake up Kohl’s operations has cut its slate of nominees for the retailer’s Board of Directors from nine to five “in the absence of meaningful progress towards a resolution” of its original demands. Kohl’s opposed the initial nominations, claiming that the disruption could jeopardize the momentum of its existing turnaround plan.

Kohl’s accused the initial directors put forth by the activist investor group, led by Macellum Advisors GP, Legion Partners Holdings, Ancora Advisors and 4010 Capital, of lacking relevant experience compared to the existing board. The retailer noted that only one was a current or former public company CEO, while Kohl’s board already includes five of these. Additionally, Kohl’s stated that four of the nine nominees had never sat on a public company board.


The smaller slate of nominees being put forth focuses on directors with significant retail experience, including Thomas Kingsbury, former CEO of Burlington Stores; Jeffrey Kantor, who spent 36 years at Macy’s in roles including Chief Merchandising Officer, Chief Stores and Human Resources Officer and Chairman of; and Cynthia Murray, former President of Chico’s.

“Each of our nominees were selected for their specific retail expertise that corresponds to issues that have historically plagued the company, and for their intense focus on creating long-term, sustainable shareholder value,” said the activist investors in a statement. “Further, they represent a diverse collection of successful executives.”

Kohl’s also has defended the success of its current turnaround effort. In an investor presentation, the retailer noted that it is focused on raising its operating margin to 7% to 8%, addressing one of the key complaints leveraged by the activist investors. The company also stated that it is already making progress through partnerships and omnichannel investments.

Another issue brought up by the activist investors was “repeated, costly private label launches” that have failed to connect with shoppers. Kohl’s is seeking to modernize itself on this front with the launch of FLX, an athleisure brand that aims to capitalize on apparel’s casualization trend. The portfolio will include both core and seasonal merchandise, building on a recently formed partnership with Eddie Bauer.

“As consumers continue to gravitate toward active and casual offerings, we saw an opportunity to introduce a private label athleisure brand to offer fashion-forward, high-quality products at a great value to our 65 million customers nationwide,” said Doug Howe, Chief Merchandising Officer at Kohl’s in a statement. “Our teams were focused on building a brand driven by style, performance and comfort, and sustainability, and we are excited to debut FLX, which marries these components seamlessly for our customers. The addition of FLX demonstrates our continued commitment to growing our active business and evolving our brand portfolio to meet the needs of today’s consumer.”

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