July 4, 2022

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Kohl's shares rise on reports that the company continues to compete amid market volatility

Kohl’s shares rise on reports that the company continues to compete amid market volatility

The Kohl logo is displayed on the outside of Kohl’s store on January 24, 2022 in San Rafael, California.

Justin Sullivan | Getty Images

kohl Shares rose more than 15% on Wednesday, after being briefly held back, hoping the retailer can still buy in the wake of the recent volatile market and Disappointing earnings report recently.

A Reuters report said that bidders competing to buy Kohl are preparing to submit binding, albeit less than indicative, bids. was cool He said last week that fully funded bids would be resolved in the coming weeksand CEO Michelle Gass said she was “pleased” with interested parties.

But retail stocks have taken a hit in recent days, amid broader market volatility, with quarterly reports released from a number of retailers including WalmartAnd Abercrombie and Fitch And kohl It revealed changing consumer behavior amid high 40-year inflation and inflated inventory levels.

Reuters reported on Wednesday, citing people familiar with the matter, that the bidders — including private equity firm Sycamore Partners, the brand’s franchise holding group — are a mall owner duo. Simon Real Estate Group And Brookfield Asset Management They plan to reduce their bids by at least 10% to 15%.

Representatives for Kohl’s and Sycamore declined to comment. Franchise Group representatives, Simon, and Brookfield were not immediately available.

Earlier this year, Kohl’s refused an offer from Starboard Value backed by Acacia Research, at $64 a share, for being so low. Reuters reported on Wednesday that some bidders have indicated a willingness to pay as little as $70 per share.

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But investors have since lost some confidence that any deal can go through, given the state of the economy and the difficulty of securing funding in the current environment. Kohl’s shares opened Wednesday at $36.81, having fallen about 40% this month alone.

Kohl’s last week lowered its full-year earnings forecast, with Gass saying the 2022 fiscal year started lower than its forecast. The company said it does not expect headwinds from inflationary pressures to abate in the near term.

The retailer also announced a loss Chief Commerce Officer and Chief Marketing Officer. Searches for their successors are underway.

Kohl’s turmoil comes as the retailer faces mounting pressure from activist hedge fund Macellum Advisors to sell the company and change its board of directors. earlier this month, Kohl’s was able to fend off Macellum’s proposal for a new slate of directors.

Macellum argued that Gass’ efforts to increase sales and gain new customers were not enough for her competition.

This isn’t the first time Macellum has pressed Kohl’s either. the two Deal struck in April 2021 to add two directors From a list pushed by a group of activists, including Macellum. Cole also appointed an independent director with the support of activists.

Gass, who took over as Kohl’s CEO in May 2018, has tried a number of strategies to attract customers to stores, including signing a partnership with Amazon And add Sephora beauty shops to hundreds of Kohl’s sites.

The company announced Wednesday morning that it will open 100 small-size stores in the next few years in markets not currently served by Kohl’s. It also said it plans to ramp up investments in all of its stores in the coming years, though it didn’t say how much money it plans to commit to these efforts.

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