(Bloomberg) — Activist investor Macellum Capital Management’s bid to overhaul the board of Kohl’s Corp. was rejected by investors on Wednesday.
Kohl’s shareholders voted against all 10 directors nominated by Macellum, according to a preliminary tally, the retailer said in a statement. The hedge fund has been pressuring the company for two years to overhaul its board or sell itself. That seems unlikely now in the wake of the proxy outcome, said Neil Saunders, an analyst with GlobalData.
“Kohl’s does need to ramp up its performance and be more radical,” Saunders said in a phone interview. “But the solutions being provided by Macellum aren’t the answer to that.”
Shares of the Menomonee Falls, Wisconsin-based retailer fell as much as 4.6% in New York. Bloomberg News reported the vote result earlier Wednesday, citing people familiar with the situation.
Kohl’s shares had declined 23% through Tuesday since reaching a 52-week high of $64.06 nearly a year ago. The slump garnered attention from numerous unsolicited suitors, including a $64-a-share offer from Acacia Research Corp., or about $9 billion. Kohl’s said in February that it had rejected takeover offers that it viewed as too low and hired bankers to field additional interest in the company.
“The Board remains focused on running a robust and intentional review of strategic alternatives while executing our strategy to drive shareholder value,” Kohl’s Chairman Peter Boneparth said in Wednesday’s statement.
Macellum’s nominees to the 13-member board included Kenneth Seipel, a former vice president of Old Navy, and Jeffrey Kantor, a former Macy’s executive. Kohl’s said the slate lacked retail experience and that Macellum, which has about a 5% stake in the retailer, was pushing “for a hasty sale at any price.”
Kohl’s board shouldn’t take the vote as a sign that shareholders are satisfied, said Jonathan Duskin, Macellum’s managing partner.
“It’s unfortunate that many investors voting for the incumbents seem to have bought into the narrative that change in the boardroom would be too disruptive during a sale process and possibly delay or jeopardize a near-term transaction,” Duskin said. “The Board should not misconstrue today’s result as a ringing endorsement of its preferred operating plan, which has been met with considerable market skepticism.”
Saunders said Kohl’s management will be under pressure to improve sales growth in the absence of a deal. The company will report first-quarter results on May 19.
The retailer has sought to drive sales by expanding its athletic wear and forming partnerships with Sephora and Amazon. Meanwhile, Macellum contends that Kohl’s should sell its real estate assets or separate the e-commerce division if it’s unwilling to sell the full company.
(Updates with analyst commentary in third paragraph, Macellum in eighth.)
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