People shop at a Kohl’s department store amid the coronavirus outbreak on September 5, 2020 in San Francisco, California.
Luu Quang Nguyen | China News Service | beautiful pictures
An activist is said to be applying pressure Kohl’s to consider selling or spinning off its online business, after Similar move by department store chain Saks Fifth Avenue, according to The Wall Street Journal.
New York-based hedge fund Engine Capital reportedly wants Kohl’s to explore two alternatives to try to boost its stock price, the WSJ said. The activist group sent a letter to Kohl’s board on Sunday, the report said. Engine Capital owns about 1% of Kohl’s shares.
Kohl’s shares closed Friday at $48.45, roughly where they were trading a decade ago, giving Kohl’s a market value of about $7.3 billion — less than with Macy’s but more Nordstrom‘NS. So far, Kohl’s stock is up about 19%, trailing the S&P 500 index.
According to the WSJ, Engine Capital said in its letter that assuming Kohl’s brings in about $6.2 billion in online sales, Kohl’s digital business alone would be worth $12.4 billion.
Engine Capital also said it believes there are private equity firms that will pay at least $75 per share, the report said. And the group of investors said that talks with potential buyers showed they could make even more money from Kohl’s property, the WSJ reported.
Representatives for Kohl’s and Engine Capital did not immediately respond to CNBC’s request for comment.
These negotiations are ongoing as investors see the appeal of owning a part of a faster-growing e-commerce division with more tech-savvy operations. Saks’ digital arm is now said to be aiming for a public release with a valuation of 6 billion dollars, or nearly six times the revenue. It was valued at $2 billion in March.
Meanwhile, Macy’s was prompted by Jana Partners activist group to tap e-commerce operations from its stores, in hopes of garnering higher valuations. Macy’s has been there since hire consulting firm AlixPartners to review its business structure.
“We also recognize the significant value that the market is assigning to pure e-commerce businesses,” Macy’s CEO Jeff Gennette said on a recent earnings call. “And as we look at the landscape today, we’re conducting additional analysis that can help inform our long-term strategy to unlock more value for Macy’s.”
Kohl’s there has been a recent clash with activist investors who cast doubt on the direction of the company and attempted to take control of its board. Team – Macellum Advisors, Ancora Holdings, Legion Partners Asset Management and 4010 Capital – reached an agreement with the retailer in April and add a number of investor-backed independent directors to the board.
In 2014, Engine Capital puts pressure on Ann, which owns the fashion brands Ann Taylor and Loft, to sell itself. The company did so the following year.
Read the full report from the Wall Street Journal here.
