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Retail in Review: Kohl’s Not Out of the Woods, BrandX Reboots Bon-Ton

Kohl’s may have won the battle to keep its board intact, but the activist investor behind the retailer’s protracted proxy fight isn’t backing down.

On Friday, Macellum Capital Management again attacked Kohl’s “illogical” transformation plan and questioned why the Menomonee Falls, Wisc. retailer’s first-quarter lagged department store peers including Macy’s and Nordstrom.

“The strong financial results recently released by Dillard’s, Macy’s and Nordstrom reinforce the massive value creation opportunities for well-run retailers executing credible plans,” Macellum managing director Jonathan Duskin said, slamming Kohl’s “weak” board and “ineffective management.”

The hedge fund, whose agitation last year forced Kohl’s to add new board members, again urged shareholders to “insist the Board accept the best and highest offer received at the conclusion of the ongoing sale process.” Reports suggest Kohl’s window of opportunity could be narrowing as Brookfield Asset and Hudson’s Bay are said to have withdrawn from sale talks. Simon Property, which reportedly was coordinating with Brookfield for a joint bid, is said to be preoccupied elsewhere.

Macellum went on to blame the retailer for failing to adapt to how consumers are shopping as the U.S. emerges from Covid-19. “Indeed, retailers with clear value propositions, effective leadership teams and viable operating strategies are adapting to the post-pandemic economic landscape and starting to sustain profitable growth,” said Duskin, whose firm controls 5.4 percent of Kohl’s shares.

The financier might not be wrong about why Kohl’s should sell itself. If anything, the company might be better equipped to shape up outside of the fishbowl that comes with being publicly traded.

BrandX reboots Bon-Ton

Elsewhere in the department store sector, Bon-Ton is mounting another kind of comeback after a tumultuous few years.

Bon-Ton’s 2018 liquidation transferred the retailer’s most critical assets to CSC, which brought the department store back in an online-only format. Then BrandX sprang up last year with Deepak and Kamal Ramani at the helm as CEO and CFO, respectively. The newbie quickly nabbed Bon-Ton along with Bergner’s, Boston Store, Carson’s, Elder-Beerman, Herberger’s and Younkers, before this year taking over Goody’s, Gordmans, Palais Royal, Peebles and Stage Stores, banners left idle after Stage Stores Inc.’s bankruptcy and liquidation.

Now, BrandX is planning a second digital reboot for Bon-Ton and could follow up by opening a Carson’s store next year with a Younkers brick-and-mortar return close on its heels. Reports suggest BrandX will open stores for all brands in its portfolio.

BrandX could face an uphill as its nameplates typically operated in less-desirable “B” and “C” malls. But Stage was always considered something of an outlier, since it operated in areas light on competition. However, inflation-hit shoppers might start moving their dollars from the Macy’s and Nordstroms of the world to some of these next-tier contenders.

Bob’s Stores, Eastern Mountain Sold

On the outdoor and family apparel front, Bob’s Stores and Eastern Mountain Sports are under new ownership after Frasers Group plc sold their assets for $70 million to GoDigital Media Group, whose leadership includes veterans of Gap, BCBG and Next.

“The disposal of these non-core businesses allows FG to have an even greater focus on delivering its Elevation strategy by focusing on store experience, digital and product,” said the British retail company, which acquired Eastern Mountain Sports in April 2017 and Bob’s Stores two months later.

GoDigital CEO Jason Peterson described the deal as a “major step in our strategy to generate synergy between content, community, and commerce.”

“The outdoor adventure and work markets perfectly align with our business model to serve specialized audiences with huge potential,” he added. “We seek to sell through a combination of owned and operated e-commerce storefronts, third-party digital storefronts, and traditional retail partners.”

Peterson went on to say that adding Eastern and Bob’s to GoDigital’s portfolio marks a “great opportunity to apply our prowess in product development, supply chain, and e-commerce across all of our brands.”

GoDigital gains 900 employees, 42 stores and a warehouse and fulfillment center as part of the transaction.

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