An activist investor wants Kohl to remove longtime president Peter Boneparth and veteran CEO Michelle Gass.
In a letter sent to the department store chain’s board of directors Thursday, Ancora Holdings said Boneparth and Gass failed to reverse Kohl’s “sustained underperformance” and unlock shareholder value.
“The combination of the ineffective leadership of the board led by Boneparth and the poor execution of the management, as the company’s numbers show, force us to ask for a new president and CEO at this critical crossroads,” wrote Ancora.
The letter states that Kohl’s shares have declined 11.38% since Bonepath’s appointment as director in 2008 and 24.71% since Gass was named CEO-elect in September 2017.
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The company, which owns 2.5% of the retailer’s outstanding shares, says it has spent nearly 18 months privately engaging with Kohl’s leadership on recommendations to help restore its business.
“We have thoughtfully withheld public criticism during this period to provide Kohl with time to recover from the COVID-19 pandemic, conduct a productive review of strategic alternatives, and produce a viable standalone plan that investors could support,” the letter states. “To our great disappointment, Kohl’s failed to realize each of these critical priorities under President Peter Boneparth (who was a director for nearly 15 years) and CEO Michelle Gass (who was a C-level leader for almost a decade). “
Ancora argues that Kohl needs new leadership with “proven experience in cost containment, margin expansion, product catalog optimization, and most importantly, turnarounds.”
Last year, Kohl’s agreed to add three new directors to its board after Ancora, Macellum Advisors and Legion Partners Asset Management attempted to take control. Sources familiar with the matter told FOX Business Ancora believes former Burlington Stores CEO Thomas Kingsbury, who joined Kohl’s board in 2021 as part of the deal, could work as a possible successor for Gass or Boneparth.
A Kingsbury representative did not immediately return FOX Business’ request for comment.
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According to Ancora, Gass is a “talented leader” who “deserves credit for establishing an innovative partnership with Sephora USA, Inc. and holding the organization together during the pandemic.”
However, they blame Gass for a “disturbing level of turnover in c-suite” and said he selected “suboptimal staff”. They also said that his compensation of nearly $ 60 million between fiscal years 2017 and 2021 was excessive given the company’s poor returns and alarming rate of contraction.
Additionally, the letter states that the Boneparth-led council has helped create an environment in which Gass “is no longer well positioned to lead.”
A Kohl’s spokesperson told FOX Business that the board “unanimously supports” Gass and his leadership team.
“We remain committed to maximizing value and acting in the best interest of all our shareholders by staying focused on running the business and the Board continues to actively engage with management to navigate the current retail environment,” added the company. society.
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The letter comes after Kohl’s turned down multiple offers from potential buyers because they were too low. Most recently, Kohl’s sales talks with Franchise Group broke down in July. The owner of Vitamin Shoppe initially offered $ 60 per share, but later lowered the offer to $ 53 per share due to an uncertain economic environment.
Earlier this month, people familiar with the matter told Reuters that private equity firm Oak Street Real Estate Capital made an offer to acquire up to $ 2 billion of Kohl’s property and have the company. for rent its shops.
Standard & Poor’s downgraded Kohl’s on Sept. 16, citing that competitive pressures in the evolving and highly competitive department store segment remain significant.
“With a failed review of alternatives and the recent credit downgrade now casting shadows on what is a shrinking business, we estimate Kohl’s has started trading at a steep discount to its liquidation value,” the letter adds. Yet. “It is now up to management to start performing flawlessly in an environment that includes high inflation, intense competition and headwinds of recession.”
At the time of publication, Kohl’s shares have plummeted about 45% year to date.