Kohl’s activist investor group ‘skeptical’ that the Amazon returns program is good for earnings


The group of activist investors seeking control of the board at Kohl’s Corp.
have published another letter citing a number of problems stemming from the fourth-quarter earnings report. Kohl’s reported earnings and revenue that beat expectations. However, the group, which includes Macellum Advisors and Ancora Holdings and holds 9.5% of the company’s outstanding shares, says the report and the guidance “substantiate the immediate need for change on the board.” The group says the dividend, reinstated at $1, well below the pre-pandemic level of $2.81, “contradicts the the progress the board is touting.” Sales are underperforming other retailers. And the Amazon.com Inc.
returns program that the company has credited as a traffic driver is not good for the company’s earnings. “From an outside perspective, we have seen the program increase SG&A and yet revenue has seen little if any observable benefit,” the group says. Kohl’s Chief Executive Michelle Gass has spoken with The Wall Street Journal about the activist investors, saying the company is already acting on many of its demands, and others, like the sale-leaseback, wouldn’t have any benefits. The retailer responded on Friday to the latest letter, saying the company is “building momentum” and has a clear strategy to accelerate growth. “The activist investor group’s comparisons of 2019 results to expectations for 2021 are nonsensical given a continuing global pandemic. The activist’s comments and track record reveal that they are focused on short-term payout at the expense of sustainable success,” the company said in a statement. “The Kohl’s board of directors and management have successfully positioned our company for a multi-year improvement at the top and bottom line. We reject the activists’ short-termism and their attempt to disrupt our momentum at this critical time.” Kohl’s stock has rallied 30.4% over the last three months, and 56.2% over the past year. “We do not believe Kohl’s recent stock performance shows the full picture,” activist investors also argue in their letter. Kohl’s shares have outpaced the benchmark S&P 500 index
which is up 23.7% over the last 12 months.


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