Activist investor Ancora Holdings is once again putting pressure on Kohl’s (NYSE:KSS) board, this time pushing for the removal of the company’s CEO Michelle Gass and Chairman Peter Boneparth. In a letter addressed to Kohl’s board of directors, Ancora, which has about 2.5% stake in the company, urged for the appointment of new leadership with “demonstrated experience in cost containment, margin expansion, product catalog optimization and, most importantly, turnarounds.”
The move comes after Kohl’s terminated the plan to sell its business to the Franchise Group (FRG), the owner of The Vitamin Shoppe. Kohl’s, like several other retailers, has been under pressure due to weak sales and dwindling profits amid high inflation and macro challenges. Even before the onset of the COVID-19 pandemic, Kohl’s and other department store chains, like Macy’s (M), were feeling the impact of the rising strength of off-price retailers.
In early 2021, Ancora, along with other activist investors, tried to take control of Kohl’s board and advised the company to consider a sale-leaseback of some of its non-core real estate. The activist shareholders later reached a settlement with the company, pursuant to which two new independent directors were nominated by them. Furthermore, they supported another independent director chosen by the company.
As per a Wall Street Journal report, citing people familiar with the matter, Burlington Stores’ (BURL) former CEO, Thomas Kingsbury, could be a possible candidate to succeed Ms. Gass as CEO or Mr. Boneparth as Chairman. Note that Kingsbury joined Kohl’s board in 2021 as part of the settlement with activists.
Is Kohl’s a Good Stock to Buy?
Wall Street analysts are sidelined on Kohl’s, with a Hold consensus rating based on three Buys, eight Holds, and three Sells. The average Kohl’s price target of $32.29 implies 19.9% upside potential. Shares have plunged 45.5% year-to-date.
Ancora is seeking new leadership with the expertise to revamp Kohl’s business amid a tough macro backdrop. Pressure from activist investors in the midst of the ongoing challenges adds to the management’s woes.