Macellum Issues Final Letter to Kohl’s Shareholders Summarizing its Case for Boardroom Change
09 Maio 2022 - 08:00AM
Business Wire
Contends the Election of Macellum Nominees
Is a Necessary Insurance Policy to Preserve and Maximize
Shareholder Value
Macellum Advisors GP, LLC (together with its affiliates,
“Macellum” or “we”), a long-term holder of nearly 5% of the
outstanding common shares of Kohl’s Corporation (NYSE: KSS)
(“Kohl’s” or the “Company”), today issued the below letter to
fellow shareholders. As a reminder, Macellum is asking shareholders
to vote on the WHITE proxy card
to elect its aligned and experienced candidates to the Company’s
Board of Directors (the “Board”) at the 2022 Annual Meeting of
Shareholders (the “Annual Meeting”) on May 11, 2022. To review all
materials issued by Macellum’s campaign, visit
www.KeepKohlsAccountable.com.
***
Fellow Shareholders,
Over the past two years, Macellum has worked tirelessly to help
improve the Board and unlock enhanced value for all of the
Company’s stakeholders following more than two decades of
stagnation. In 2021, we were able to add two highly qualified
director designees, Thomas Kingsbury and Margaret Jenkins, to what
became a 13-person Board. We were also able to facilitate the
departure of a Chairman with a 30-year tenure and drive the Company
to increase share repurchases. Unfortunately, these incremental
changes were not enough to help Kohl’s deliver better results and
keep pace with other soft goods retailers that began to grow in the
post-pandemic environment. As evidence, the Company’s share price
dropped 22% from the point in which we settled (April 2021) to the
point in which we initiated a new campaign this year (January
2022), while several peers generated far better performance.1
With the Annual Meeting in just two days, we urge our fellow
shareholders to reflect on the following before casting their final
ballots:
- We believe voting on Macellum’s WHITE proxy card for at least a subset of our
nominees, including a shareholder representative, is the best
insurance policy for shareholders, regardless of whether a sale
occurs or not.
- If Kohl's is on its way to being sold for a fair price, that
will be a great outcome for shareholders. Voting for Macellum’s
nominees will not change that outcome of a sale. In fact, our
nominees would likely serve at a handful of meetings to discuss and
approve a transaction and then would be another set of eyes in the
boardroom for shareholders to help ensure a transaction is
successfully completed.
- However, should the Board have a sudden change of heart
due to the reelection of incumbents and misconstrues those
results as support for management’s standalone plan, you should
want Macellum nominees in the boardroom. We fear, as does Morgan
Stanley analysts, that the Company’s share price could tumble into
the low to mid $40s, effectively destroying more than $1.5 billion
in value, if a sale is not achieved. The Company’s standalone plan
was not only poorly received when released on March 7, 2022, as
reflected with a 13% drop in the stock price on that same day, but
also relies on something that has not occurred in 10 years at
Kohl’s – sales growth.
-
It is especially concerning that the current Board appears to be
using, based on management’s standalone plan, targets of $75 per
share to $88 per share to benchmark offers against. We struggle to
see any scenario where the Company’s capital-intensive and risky
plan, which projects declining EBIT and
increasing capital expenditures, will result in anything
close to recently reported offers, even 3-years from now.
- Shareholders should be wary of the Company’s refusal to
share its results for the first quarter of fiscal 2023, despite
their claims of business momentum.
- Underperformance in the first quarter of 2023, after a weak
fourth quarter in fiscal 2022, would be more validation of a
strategy that is not working. Shareholders need to ask why they are
being forced to vote at the Annual Meeting without this critical
piece of information. Cynically, perhaps, we suspect that if
results were positive, they would have been made public by
now.
- If true, weak performance could result in lower take-private
prices that may not meet with the Board’s already unrealistic
expectations. In this case, shareholders should want objective,
unbiased voices on the Board to ensure expectations are level
set.
- Despite all the Board has said about conducting a robust
process, there are still reasons to skeptical.
- We believe that had we not embarked on this campaign, buyers
would never have surfaced and if we had not kept up our public
pressure, the Board would have ignored this strategic interest.
With the pressure off, how can we trust this Board to act in the
best interests of shareholders?
- Keep in mind that earlier this year, the Board abruptly
rejected indications of interest from two credible and
well-capitalized acquirers before apparently providing sufficient
access to management, a robust data room and other information that
could have informed upward adjustments to such offers. The Board
subsequently implemented an onerous, two-tiered poison pill that
could only serve to chill acquirers’ interest.
- Despite credible reports swirling about several suitors who are
interested in bidding close to or above $70 per share, why does
the stock still trade at a substantial discount to reported offer
prices?
- While the Board could have delayed the Annual Meeting until
July under applicable law, it chose to hold this year’s meeting
before disclosing the results of its process. This lack of
transparency goes to the heart of why Macellum nominees should be
added to the Board at this critical time.
- Lastly, shareholders should know that there is no recourse
after this vote.
- Wisconsin law allows the Board great flexibility to consider
the interests of an expanded constituency to reject an offer, even
if an offer may be in the best interest of shareholders. It is also
notable that we, as shareholders, have no ability to hold the Board
accountable before the 2023 annual meeting if the Board does not
act in the best interests of shareholders following this year’s
Annual Meeting.
Macellum has been a shareholder of Kohl’s for multiple years.
We do not want an outcome at this year’s
Annual Meeting that may lead to a permanent impairment of
value.
We strongly urge you to help protect all shareholders and
stakeholders by voting on Macellum’s WHITE proxy card. In our view, the greatest
risk we can take as shareholders is doubling down on the current
Board and management team once again after the last 20+ years of
stagnation at Kohl’s.
Thank you for your support.
Jonathan Duskin Managing Partner Macellum Advisors
***
VOTE THE WHITE
PROXY CARD TO ELECT MACELLUM’S ALIGNED AND EXPERIENCED
SLATE.
LEARN MORE ABOUT MACELLUM’S SLATE HERE:
WWW.KEEPKOHLSACCOUNTABLE.COM/NOMINEES
CONTACT INFO@SARATOGAPROXY.COM WITH
QUESTIONS ABOUT YOUR PROXY AND HOW TO VOTE.
***
About Macellum
Macellum Capital Management is an activist investment firm, with
deep expertise in the retail and consumer sectors, founded in 2009
by Jonathan Duskin. Macellum invests in undervalued companies that
it believes can appreciate significantly in value as a result of a
change in corporate strategy or improvements in operations, capital
allocation or corporate governance. Macellum’s investment team,
advisors and network of industry experts draw upon their extensive
strategic, operating and boardroom experience to assist companies
in designing and implementing initiatives to improve long-term
shareholder value. Macellum prefers to constructively engage with
management to improve its governance and performance for the
benefit of all stockholders. However, when management is
entrenched, Macellum has run successful proxy contests to
effectuate meaningful change. Macellum has run successful election
contests to effectuate meaningful change at many companies,
including at The Children’s Place Inc., Citi Trends, Inc., Bed Bath
and Beyond and Big Lots, Inc. Learn more at
www.macellumcapitalmanagement.com.
_____________________________
1 Share price decline reflects the period beginning April 13,
2021 and running through January 17, 2022. Reference to other peers
includes Macy’s and Dillard’s.
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version on businesswire.com: https://www.businesswire.com/news/home/20220509005349/en/
For Investors:
Saratoga Proxy Consulting John Ferguson / Joe Mills,
212-257-1311 info@saratogaproxy.com
For Media:
Longacre Square Partners Greg Marose / Casie Connolly,
646-386-0091 macellum@longacresquare.com
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