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Kohl's Has Joined Dollar Tree, Macy's In an Uncomfortable Club

Kohl's has joined peer retailers Dollar Tree and Macy's as a target of activist investors.
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Kohl's  (KSS) -  joined peer retailers Dollar Tree  (DLTR) -  and Macy's  (M) -  as a target of activist investors.

For the second time in as many months, the Menomenee Falls, Wis., company was the focus of an investment firm seeking changes.

The New York investment firm Macellum Advisors, which said it held nearly 5% of the retailer, said it would nominate a slate of director candidates to Kohl's board "if the status quo persists."

, saying it was "disappointed with the path they have taken and the unfounded speculation in their announcement and letter. ...

"Our strategic plan to transform Kohl's into the leading omnichannel destination for the active and casual lifestyle continues to gain traction. Our third quarter 2021 performance demonstrates continued progress: Net sales increased 16%, beating expectations, due to strong performances across both stores and digital. ...

"Based on our performance in 2021, we are positioned to exceed our key 2023 financial goals two years ahead of plan. ...

"Our recently refreshed Board has the right mix of fresh perspectives, industry and financial expertise and institutional knowledge."

Engine Capital Revved Up Kohl's Proposals

In early December Engine Capital, also a New York investment firm, urged Kohl's to consider selling itself or separating out its e-commerce business.

Engine Capital said at the time that it owned about 1% of Kohl's.

The firm said that the retailer had underperformed the S&P 500 and its retailing peers. "Our own due diligence leads us to believe there are financial sponsors who will be able to pay a significant premium of 50%, or at least $75 per share," for the company, Engine Capital said at the time.

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Kohl's responded then that the board and management examine all opportunities to maximize value for holders, . And Kohl's said that its strategy was gaining traction.

Dollar Tree and Mantle Ridge

In December the activist investment from Mantle Ridge proposed a full new slate of directors to Dollar Tree’s board.

The New York firm, called for a review of the retailer's business strategy, also was calling on the retailer to consider hiring Richard Dreiling, former CEO at Dollar General  (DG) - , as a senior executive.

of Dollar Tree.

Dollar Tree's board is up for reelection at the 2022 annual meeting, Reuters reported.

Dollar Tree had responded hard to Mantle Ridge. and "Mantle Ridge was unable to articulate ways to improve our business and strategy, and instead came with ."

The board "is unanimous that Mantle Ridge’s demand is unwarranted, especially given our increasingly strong performance from our strategic initiatives underway," Dollar Tree said.

On social media, some consumers are grumpy about DLTR's decision to raise prices.

Macy's Urged to Sell E-Commerce Unit

In November, Macy’s said it was working with the consultants AlixPartners to review its business structure, . 

The move came a month after the New York activist hedge fund  to sell its e-commerce business.

Jana said in October that Macy’s could double its share price if it separated out the e-commerce business.

In a presentation , Jana said that Macy's could follow the lead of Saks Fifth Avenue. Saks parent Hudson’s Bay spun out the retailer’s e-commerce business.

The idea behind such a spinout is that investors can independently evaluate the brick-and-mortar and online businesses and decide where they might get the best returns.

Online shopping has jumped in recent years. And for periods during the pandemic, it was all many people could do since stores closed during lockdowns.

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