Relentless attempts by activist investors to force a sale of Kohl’s have not resulted in a transaction, though the push by groups like Ancora Holdings and Macellum Advisors to overthrow the leadership of the 60-year-old Wisconsin-based retail chain appears to have claimed the top dog.
Tuesday morning, Kohl’s announced CEO Michelle Gass is stepping down from her role effective Dec. 2, 2022 to take over as president of Levi Strauss on Jan. 2, 2023. Board director and one-time Burlington executive Tom Kingsbury, one of Ancora’s board nominees last year, has been tapped to replace Gass in an interim role until a permanent replacement is found.
“I am incredibly proud of what the team at Kohl’s has accomplished and I’m very confident in their ability to drive continued innovation, growth and value for customers,” Gass said in a statement. “Kohl’s associates and brand partners are an inspiration to me, and I am truly grateful to have had the opportunity to work with this great team and company.”
Kingsbury continued the upbeat tone, even as Kohl’s has seen its sales decrease by 7 percent in the third quarter vs. 2021 and lost its chief merchandising and marketing officers earlier this year.
“I’m proud and humbled to take the Interim CEO role during such an important time for the Company,” he said. “Despite a challenging economic environment, Kohl’s is well positioned for long-term success with its unique off-mall store footprint, omnichannel presence, and loyal customer base. The Board and I are committed to the continued refresh and innovation strategy Kohl’s has begun, the cornerstone of which is the terrific partnership we have with Sephora. I firmly believe in the long-term potential of this Company, our associates and our ability to deliver value for shareholders.”
Until July of this year, Kohl’s had been in sales talks with Franchise Group, whose holdings include Kohl’s common shopping plaza neighbor Vitamin Shoppe. A proposed exclusive offer of $8 billion or $60 per share was on the table until Gass and the board led by chair Peter Boneparth, whose ousting Macellum had called for specifically, decided to take Kohl’s off the market and instead focus on monetizing its considerable real estate holdings.
It’s those holdings — 410 owned locations, and more than 700 owned and operated or leased spots — would-be buyers and activist investors want most, especially considering that Kohl’s current stock value is down to $29 per share.
“When you combine that with what we think the levels of the stock are, it becomes a much different exercise than it was in a previous financing environment,” Boneparth told CNBC in July. “It’s no secret that Kohl’s has a very big asset on the balance sheet: Real estate.”
Representatives from Kohl’s and Macellum Advisors — which has a 5 percent stake in the company — have yet to respond to questions posed by Sourcing Journal as to whether Gass’ resignation is proof that aggressive tactics like those employed in the ongoing Kohl’s saga do, in fact, work.
Late Tuesday morning, Ancora Holdings took a victory lap at the news, issuing the following statement:
“As outlined in our September 22nd letter to the Kohl’s Board of Directors, it is the right time for the Company to pivot to a leadership team with enhanced operational expertise and strong turnaround experience. We are very pleased that Kohl’s will be appointing retail sector veteran Tom Kingsbury, who was nominated by our shareholder group in 2021, as its interim Chief Executive Officer. We are also pleased that Tom and our group’s other designee, Margaret Jenkins, will be part of the new committee tasked with identifying the right permanent leader for the business. Ancora has been a long-term shareholder of Kohl’s and believes that under the right leadership, the Company can be a source of tremendous value for investors, customers, suppliers and employees.”
Back in early 2021, Gass expressed confidence that she and the board would be able to beat back the coming aggression of activist investors who smelled blood in the water after Kohl’s posted sales that were down 20 percent year-over-year.
“On the activists, I can’t speculate on their motivations,” Gass told the Milwaukee Journal Sentinel. “But whatever their reasons, I can tell you that we’re way ahead of them.”
Wall Street appears to have taken an immediate liking to the news of Gass’ resignation, as Kohl’s stock rose $2.15 or 8 percent in Tuesday morning trading.
Gass’ next employer, Levi Strauss & Co. wasn’t performing as well Tuesday morning, with stocks down $0.22 or 1.43 percent in wake of the news.
At Levi’s, Gass will report directly to CEO Chip Bergh and succeed former president Jennifer Sey, who upon leaving the company in February 2022 said she was ‘pushed out’ because of her position on Covid policies, even refusing a $1 million buyout on principle.
“I made the decision to leave on my own, on my own accord and on my own terms so I could speak freely,” Sey told CNBC. “I feel the issues at stake here are not just kids but free speech more broadly and accepting a package to stay silent would fly in the face of that.”
Gass, however, is on the fast track to becoming CEO for what is arguably America’s most iconic denim brand as Bergh, after 11 years at the helm, will be handing the reins to Gass within the next 18 months, the company says.
“I am thrilled not just about Michelle being my successor, but also about having the chance to work closely together during the transition,” he said in a statement. “I have known Michelle for a decade, and she has many of the qualities we value in our leaders: she is humble, approachable, transparent and driven by purpose and values. She has a track record of building brands and talent. Michelle also brings more than 25 years of retail and omni-channel experience, along with a demonstrated track record of innovation, driving transformational ‘big ideas’ not just on products but also business models. With this move, I am even more confident in this company’s future.”