After weeks of pressure from an activist investor, Kohl’s has confirmed that it is weighing offers from multiple parties that are interested in purchasing the company.
The department store chain said in a Monday press release that it has hired Goldman Sachs to engage with potential bidders and discuss alternatives for the business. Kohl’s said in a separate letter to shareholders that it has engaged with over 20 parties. These proposals, Kohl’s said, are non-binding and without financial commitment.
“Our board’s approach is robust and intentional, and the Board is committed to pursuing the path that it believes will maximize shareholder value,” Kohl’s said in the letter to shareholders.
Macellum Advisors, which owns nearly 5% of shares at Kohl’s, has expressed skepticism about the future of the company, given its current board of directors and perfomance compared to retail peers. Macellum, which has asked Kohl’s to consider taking an offer to sell its business, last month said that it would nominate 10 candidates for election to the company’s board of directors at the annual shareholder meeting on May 11, 2022.
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“Macellum is seeking to take control of your Board with a slate of nominees that have inferior capabilities and are not equipped to create value for shareholders,” Kohl’s said in the letter, which urged shareholders to vote for the company’s board nominees in its annual shareholder meeting.
Kohl’s shares were down almost 1% by early afternoon on Monday.
According to an Axios report last week, Hudson’s Bay Co., which owns Hudson’s Bay and Saks, was interested in making a play for the off-price retailer. The report also said that private equity firm Sycamore, which had previously been cited as a potential contender, could still be in the mix. Sycamore declined to comment. HBC did not return requests for comment, but a source close to the company said it is putting in a bid.
A Kohl’s spokesperson previously told FN that the company’s board was engaging in robust and ongoing discussions with bidders, though they did not address specific would-be acquirers.
Kohl’s previously rejected two offers to acquire the company and said they did “not adequately reflect the company’s value in light of its future growth and cash flow generation.” Kohl’s also instituted a “limited-duration shareholder rights plan” effective until February 2023 to help the company avoid an unwanted takeover.
Kohl’s said this month that the restructuring of its business has helped it achieve profitability and record earnings per share in 2021.
The retailer said it hit an all-time record of adjusted earnings per share of $7.33 in 2021, with an operating margin of 8.6% that surpassed its goal of 7% to 8% two years ahead of schedule. Kohl’s also posted a better-than expected Q4 EPS of $2.20 versus an expected $2.12. Q4 revenues reached $6.22 billion, short of a predicted $6.54 billion, according to analysts.
In light of the results, Kohl’s shared an optimistic outlook for 2022 and expects net sales to increase 2% to 3% over 2021. The company expects EPS between $7 and $7.50.
