What: Kohl’s returns to previous strategies after negotiations with The Franchise Group fall through.

Why it is important: As negotiations with The Franchise Group collapsed, Kohl’s chief executive officer, and chairman Peter Boneparth returned to the company’s earlier strategy of monetizing real estate to avoid selling the company. Kohl’s owned real estate was valued at around 8 billion USD by activist investor Macellum Advisors, though Kohl’s has not disclosed the value of its real estate. Kohl’s owns about 400 of its more than 1,100 stores.

At various times during this year, preliminary offers were around 60 to 70 USD a share, but the stock market’s volatility, the changing retail environment, and, possibly, Kohl’s financial performance, brought the price down. The list of potential buyers of Kohl’s has been exhausted.

With reduced spending, Kohl’s has expressed preparations for increasing promotions and flexible spending. Kohl’s continues to open new small-format stores throughout the U.S. Kohl’s is also betting on a strategy of implementing “zones” designated for female-owned and emerging brands.

To date, there are nearly 600 Sephora shops inside Kohl’s, and 850 should be operating in 2023. The company has acknowledged the risks of potential unemployment, declining health of their lower-income consumer, decreased savings rates, and the overall promotional environment posing a challenge to their Sephora partnership strategy.

The future of Kohl’s after collapsing negotiations