Kohl’s Corp. responded to the nomination of ten directors for election to the retailers’ Board of Directors by Activist investor group Macellum Advisors by noting that its Board now includes three independent directors that joined as part of a settlement with Macellum and other shareholders in April 2021.
Overall, Kohl’s noted that it had added six new independent directors in three years.
Kohl’s also said its Board remained committed to evaluating and pursuing any value-enhancing opportunities with a Finance Committee designated to lead the ongoing review of any expressions of interest. Kohl’s also said its Board and management remained focused on executing its current strategy to drive sustained shareholder value.
Kohl’s said in the statement, “Kohl’s believes Macellum’s effort to take control of the Board is unjustified and counterproductive. Kohl’s appointed two of Macellum’s designees, along with an additional mutually agreed upon designee, to its Board pursuant to the 2021 settlement agreement with Macellum and certain other shareholders. All members of the Kohl’s Board, other than its CEO, are independent.
“Macellum’s claim that Kohl’s Board is not equipped to evaluate sale opportunities is groundless. The Board designated its Finance Committee, which is comprised entirely of independent directors, was formed pursuant to the settlement with Macellum and included one of Macellum’s 2021 designees to lead the review of any expressions of interest. Additionally, the company and the Board have engaged financial advisors, including Goldman Sachs and PJT Partners, and have asked Goldman Sachs to engage with interested parties.
“Furthermore, Macellum’s claim to be “disappointed and shocked” by Kohl’s rejection of the previously disclosed expressions of interest is disingenuous. Macellum has on multiple occasions stated publicly that Kohl’s is worth “at least $100 per share.
“Finally, Macellum’s comments on the Board’s adoption of a limited-duration shareholder rights plan are misleading. The Board adopted the rights plan to protect shareholder value by ensuring that the Board can conduct an orderly review of any expressions of interest and by preventing any person or group from gaining control of Kohl’s through open market accumulation.
“The rights plan does not preclude the Board from considering any offers that recognize the value of the company. Macellum itself publicly acknowledged on February 4 that the shareholder rights plan Kohl’s adopted is “still a stop, look and listen mechanism.” As demonstrated by Macellum’s latest announcement, the rights plan also does not impact shareholders’ ability to initiate a proxy contest.
“The Board reaffirms its commitment to maximizing the long-term value of the company. It will continue to pursue all reasonable opportunities to drive value, consistent with its fiduciary obligations.
Our Strategy Is Delivering Results
“As we previously announced, based on our performance in 2021, we are positioned to exceed our key 2023 financial goals two years ahead of plan. Our work to fundamentally restructure the business allowed us to achieve a nine-year high operating margin in Q3 and record Q3 earnings per share, positioning us to achieve significantly enhanced profitability going forward. These results reflect our strategic focus on transforming the operating model and making Kohl’s the leading omnichannel destination for the active and casual lifestyle.
“We are optimistic about significant value creation in both the near and long term as a result of our transformational strategy. As one example, we have rolled out 200 Sephora at Kohl’s shops to date and expect to launch an additional 650 shops in the next two years, including over 400 in 2022. As we noted in our 2021 third-quarter earnings, we see an incremental mid-single-digit lift to store sales where we have opened Sephora at Kohl’s shops and more than 25 percent of Sephora at Kohl’s shoppers are new to Kohl’s.
“Kohl’s looks forward to sharing additional details on the progress against its growth strategy as well as an updated financial framework and capital allocation strategy at the previously announced Investor Day on March 7, 2022.
Shareholders Not Required To Take Action
“The Board will present its recommendation regarding director nominees in Kohl’s definitive proxy statement and other materials, to be filed with the U.S. Securities and Exchange Commission and made available to all shareholders eligible to vote at the 2022 Annual Meeting. The company will announce details regarding the 2022 Annual Meeting in due course.”
Photo courtesy Kohl’s/Reuters
