Kohl’s urged by Macellum to make a change or explore a price cut

An activist investor is renewing push to acquire a department store chain

Kohl’s Inc.

KSS -1.93%

take action to increase the number of stocks that are lagging.

Macellum Advisors GP LLC, which has about a 5% stake in Kohl’s, has urged the company to make changes including changing its board of directors, people familiar with the matter said. Kohl’s has so far declined Macellum’s request to add directors with retail experience or a shareholder to its board, the people said. New York hedge fund, part of the group run a proxy war at the retailer last year, is now expected to do so again.

Kohl’s shares have risen in the first few months of 2021 but are down about 20% since activists reach a settlement in April 2021 and is trading below levels two decades ago. Menomonee Falls, Wis., has a market value of approximately $7.2 billion.

Macellum is telling Kohl’s that if it doesn’t change its board, the company should hire bankers to explore a purchase or other transaction. Macellum has told the company it thinks there are potential buyers who have shown interest.

Kohl’s said in a statement that it continuously looks at all opportunities to maximize shareholder value and that strong operating results in 2021 demonstrate its strategy is working. It said it plans to share more details on strategic initiatives and capital allocation plans at investor day on March 7.

Late last year, another activist hedge fund, New York-based Engine Capital LP, said it owned about 1% of the shares and urged Kohl’s to explore a purchase.

Over the past year, Kohl’s has made a number of changes, including restoring its dividend and boosting its share buyback. It is also investing in a new partnership with cosmetics chain Sephora and updating more than half of its more than 1,000 stores.

Macellum, which focuses on retail, nominated nine directors early last year along with three other activists – including Macellum CEO Jonathan Duskin – and urged Kohl’s to cash in on its estate and make changes in its operations. Kohl’s said it had previously concluded that the sale and sublease of its property would not add value.

The group then reached a settlement as Kohl’s stock was recovering, putting two nominees and a third director on the board. The agreement barred Macellum and other companies from inciting the company until last week.

The window to nominate a director to Kohl’s board opened on January 12 and ended in mid-February.

Write letter for Cara Lombardo at cara.lombardo@wsj.com

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Ian Walker

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