Kohl’s, the second-largest U.S. department store chain, has been urged by activist investors to either sell itself outright or consider a spin-off of its eCommerce division in a bid to boost its stock price.
According to The Wall Street Journal, New York-based hedge fund Engine Capital is calling on Kohl’s to either sell the company or separate its eCommerce business in response to its failing stock price, which has slumped 25% in the past 7 months after more than doubling from the pandemic lows set 19 months ago.
Engine, which owns around 1% of the $7.3 Billion retailer, pointed to its underperformance compared to the S&P 500 and other retailers for the past few years, with the shares closing at $48.45 on Friday (Dec. 3), which is approximately where that stock was 10 years ago.
According to Engine, just the company’s online sales revenue, projected at about $6.2 billion, would value the company’s digital business alone at $12.4 billion.
And Engine said there would likely be private equity firms willing to pay around $75 a share, citing interactions with buyers that persuaded it that Kohl’s real estate could be monetized.
The move on Kohl’s comes less than a month after a similar push was made to separate Macy’s dot-com business from its physical store, just as Saks did earlier this year. Macy’s is still studying the possibility but has said previous research showed the department store and website worked better together.
Previously, Kohl’s has said those sorts of sale-leasebacks wouldn’t help its value, with CEO Michelle Gass refuting such ideas on the company’s last earnings call, saying that the eCommerce unit of Kohl’s works well with its stores.
Kohl’s and Sephora’s partnership on a shop-in-shop has reportedly been doing well. The partnership purports to bring Sephora beauty and personal care items to more of an audience.
According to Kohl’s, revenue jumped 15.6% in Q3 compared to the same time in 2020. The revenue was under $4 billion last year and was at $4.6 billion for the three-month period ending on Oct. 31. And Kohl’s also saw a 32% jump in the first nine months of the fiscal year – from $9.8 billion last year to over $12.9 billion in 2021.
Gass is quoted in the report saying there’s momentum in the company’s “strategic efforts to transform Kohl’s into the leading destination for the active and casual lifestyle.”