Kohl’s Should Replace CEO, Board Chair, Ancora Says

Kohl’s store

After helping oust several Kohl’s board members last year, hedge fund Ancora Holdings is now calling on the retailer’s CEO and board chairman to step down from running the country’s largest department store.

In a letter to the board Thursday (Sept. 22), Ancora called for the ouster of CEO Michelle Gass and board chairman Peter Boneparth.

“Kohl’s needs new leadership with demonstrated experience in cost containment, margin expansion, product catalog optimization and, most importantly, turnarounds,” the letter said.

Ancora cites the board’s “ineffective leadership and management’s poor execution, as evidenced by the company’s numbers.”

The letter — signed by Ancora CEO and Chairman Frederick D. DiSanto and Ancora Alternatives President James Chadwick — praises Gass for creating a partnership between Kohl’s and Sephora and leading the company through the pandemic.

However, the letter notes that Kohl’s strategic plan got a “very poor reaction from the market … suggesting that Ms. Gass is not commanding the trust of the investment community.”

See also: Stage Set for Retail Slugfest as Kohl’s Plans Aggressive Discounting

Last month, Kohl’s said it had been “disproportionately impacted” by inflation and weakened consumer spending and would need to be assertive with its promotions to clear its inventory.

“Our second quarter results reflect a middle-income customer that has become more cost-conscious and is feeling greater pressure on their budget,” Gass told investors on the company’s Q2 earnings call, saying the figures suggested fewer shopping trips, less spending per transaction, and a move toward value-oriented private brands.

Read more: Nine New Members Added To Kohl’s Board By Activist Investors

Ancora was not available for comment Thursday.

In a statement sent to PYMNTS on Thursday afternoon, Kohl’s said, “The Kohl’s Board unanimously supports Michelle Gass and her leadership team. We remain committed to maximizing value and acting in the interests 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.”

Last year, Ancora and other investors — a group that controls a combined 9.5% state in Kohl’s — added new members of the company’s board, saying the retailer hadn’t responded quickly enough to deal with declining sales.

Learn more: Retail Downturn Leads Kohl’s to End Sales Talks

Another hedge fund investor, Engine Capital, had urged the company to put itself up for sale or spin off its eCommerce business. While Kohl’s had explored a sale, the company announced in July it was abandoning that plan, pointing to financing and retail conditions that had “significantly deteriorated.”

Retail holding company the Franchise Group had emerged as the top bidder, but Binepart said that while the two sides made a “concerted effort,” there were too many obstacles.

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