Shares of U.S. retailer Kohl’s Corporation (NYSE:KSS) rose 10.5% in early trading on Feb. 22. That jump came quickly at the open, with the shares still trending around the up 10% mark 11 a.m. EST. The big news behind the price change, however, didn’t really come from Kohl’s but from Macellum Advisors, Ancora Holdings, Legion Partners Asset Management, and 4010 Capital.
The quartet of investors owns around 9.5% of Kohl’s stock. They have nominated nine people for the retailer’s board of directors. In other words, these are dissident investors trying to take on the company’s current management team. While this effort may or may not succeed, it certainly ups the ante in a very public way with regard to any discussions between the company and this group of big shareholders.
Macellum Advisors, Ancora Holdings, Legion Partners Asset Management, and 4010 Capital have a list of demands in addition to the directors they have nominated, which should come as no surprise. Included are things like cutting executive compensation, lowering inventory levels, and doing sale/leaseback transactions for stores that Kohl’s currently owns to free up cash. The group would like to see at least part of that cash put toward stock repurchases. The hope is that these moves will boost the stock price and investors generally seem to like the idea.
It isn’t easy for even large shareholders to get an outside list of names onto a company’s board of directors. So this could just be a bargaining ploy to get Kohl’s to consider some of the alternatives being suggested by the group. Either way, Wall Street seems to be pleased with the idea that someone is lighting a fire under the feet of Kohl’s leadership team. It remains to be seen if this group can actually spur change here. However it is worth noting that some of these dissident investors have had success in previous efforts with other retailers, specifically a board shakeup at Bed Bath & Beyond.
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