Business

Kohl’s CEO, chairman under fire from hedge fund Ancora

Ancora Holdings, one of the hedge funds that presided over a board change at Kohl’s last year, is now pushing for the removal of the retailer’s chief executive and chairman, according to a letter sent to the company on Thursday.

The move marks the start of another round of shareholder unrest for Kohl’s after the company explored a sale and decided to remain independent in July, leading to a plunge in its shares and disappointing investors pushing for a deal.

Ancora, which has a 2.5% stake in Kohl’s, called for the replacement of CEO Michelle Gass and Board Chairman Peter Boneparth with business leaders who have operational expertise and experience in turning companies around.

The letter, signed by Ancora CEO Frederick DiSanto and President James Chadwick, did not specify who the successors should be.

Chairman Peter Boneparth has helped create an environment where Gass “is no longer well positioned to lead,” Ancora wrote.
Reuters photographer

“Kohl’s needs new leadership with proven experience in cost control, margin expansion, product catalog optimization and, most importantly, lead times,” the letter said.

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A Kohl representative did not respond to a request for comment.

The Menomonee Falls, Wisc. company, which operates more than 1,100 stores in the United States, saw its inventory fall 48% in the past 52 weeks and reported a 63% drop in net income and 8% lower store sales in the most last quarter ended July 30.

Kohl’s rejected multiple offers to sell itself this year, telling bidders it believed its shares were worth more than $70 a share, Reuters previously reported. The stock ended Wednesday at $27.90, giving it a market cap of $3.3 billion.

Ancora and two other investors reached a settlement with Kohl’s in 2021 that resulted in three new directors joining the board. One of the directors was Thomas Kingsbury, who became CEO of Burlington Stores in 2008 and led the retailer to a public offering in 2014.

Ancora has since become frustrated with the company’s failed attempt to sell itself.

Ancora called Gass a “talented leader” in her letter and praised the partnership she developed with Sephora and for “keeping the organization together during the pandemic.” But the hedge fund blamed her for a “disturbing level of c-suite revenue” and for choosing “sub-optimal staff”.

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Ancora Holdings Logo
Ancora has a 2.5% stake in Kohl’s.
Ancora Holdings

Ancora also wrote that the nearly $60 million in total compensation Gass received between 2017 and 2021 was too rich given the company’s poor returns.

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Boneparth, who has been with Kohl’s director since 2008 and became chairman this year, has helped create an environment where Gass “is no longer well positioned to lead,” Ancora wrote.

Private equity firm Oak Street Real Estate Capital has made an offer to acquire a whopping $2 billion worth of Kohl’s real estate and lease back its stores, Reuters reported earlier this month. Kohl’s said in July, after negotiations failed, it was looking for ways to cash in on its property.

Shares of Kohl fell 3.5% to $26.93 on Thursday.

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