Bidders for Kohl’s are reportedly preparing to make binding offers that are lower than the initial indicative bids submitted earlier this year, due to the general market downturn and Kohl’s poor performance, people familiar with the matter told Reuters. However, Kohl’s is still committed to its stores and announced a multi-year plan that includes new store openings, remodels and enhanced omnichannel capabilities.
The bidders, which reportedly include Sycamore Partners, Franchise Group, Simon Property Group and Brookfield Asset Management, plan to lower their offers by at least 10% to 15%, according to the sources. Some were willing to pay $62 per share, below Starboard Value and Acacia Research’s rejected $64 offer from January 2022 but well above Kohl’s share price of less than $42 as of May 26, 2022.
Kohl’s shares lost more than 40% of their value due to concerns that high inflation and lower consumer spending will reduce sales in the second half of the year. The retailer’s Q1 2022 sales fell 5.2% year-over-year and profit fell to 11 cents per share, compared to analyst estimates that averaged 70 cents.
Hudson’s Bay Company reportedly signaled it would be willing to pay at least $70 a share earlier in 2022, according to Reuters. The steep decline in offers may cause Kohl’s to seek bids for an additional two weeks, the sources told Reuters.
Kohl’s is still dedicated to turning its fortunes around with a renewed emphasis on physical and omnichannel operations despite investor pressure. The retailer is rolling out self-serve buy online, pick up in-store to all stores by the end of 2022 and is currently piloting self-service returns at 100 stores. It also will open 100 hyper-localized small-format stores to reach previously unserved areas.
The Sephora store-in-store partnership will continue growing, with plans for 850 shops by 2023. This expansion will go hand in hand with store remodels that place Sephora at the front of the store, with expanded categories such as activewear in the surrounding areas.
“Kohl’s began with roots as a brick-and-mortar company, and these 60 years of experience have set the company up to become a leading omnichannel retailer,” said Mark Griepentrog, Chief Property Officer at Kohl’s in a statement. “Our strong and productive off-mall store base can continuously evolve with our customer’s expectations and demand, and we see substantial opportunities to leverage our real estate in producing long-term growth.”