What: Macellum Advisors sent a letter to shareholders criticizing Kohl’s market share loss, for failing to grow 2021 revenue versus their 2019 levels. They were also criticized for having insufficient expertise on their board, and describing 2021 as “a lost year” for the retailer. In addition, Macellum is pushing Kohl’s to consider splitting up its brick-and-mortar stores and e-commerce businesses into separate companies.

Why it is important: While the separation strategy is controversial, with some experts thinking it’s only good for short-term profits, Kohl’s has some strong words for the activist shareholders pressuring them.

Macellum Advisors, which owns nearly 5% of Kohl’s shares, called for Kohl’s to add more retail expertise to its board, explore strategic alternatives including selling to a financial sponsor, or cashing in on much of the USD 7 to 8 billion in its real estate assets with sale-leasebacks.

Kohl’s responded quickly, stating that its board has the right mix of expertise and fresh perspectives; that its strategy to be the leading omnichannel destination for the active and casual lifestyle continues to gain traction, and that Macellum’s letter is “filled with unfounded speculation.”

Last December, Engine Capital LP, which owns about 1% of Kohl’s stock, sent a letter to the Kohl’s board contending that a stand-alone e-commerce business could be “conservatively” valued at USD 12.4 billion or more, compared to the retailer’s market cap of about USD 6.7 billion. As an alternative to separating the dot-com and stores businesses, Engine Capital urged Kohl’s to consider a “market test” to see how much the company could be sold for to “well capitalized” financial sponsors.

Pressure for Change Mounting at Kohl’s