NEW YORK – An activist investor is pushing department store chain Kohl's Inc. to sell the entire company or spin off its e-commerce division.
In a letter posted online Monday, Engine Capital LP said it wants the Menomonee Falls, Wisconsin-based chain to consider these alternatives to boost the stock price.
“Kohl's has a unique retail footprint relative to many mall-based retailers as well as a growing e-commerce presence, strong loyalty program, tremendous free cash flow and valuable real estate holdings,” the letter said. “However, much to our disappointment, these considerable assets and operating tailwinds continue to fail to catalyze meaningful value for shareholders.”
It said “there is no excuse for the board to cling to the status quo.”
Engine Capital said if Kohl's chose spinning off its e-commerce division, a move similar to what Saks did this year, the standalone business could be valued at $12.4 billion or more, an amount that dwarfs the company's current market capitalization.
Engine Capital also said the board should run a market test to see how much well-capitalized financial sponsors would pay for the entire company.
The Wall Street Journal was first to report the story on its website Sunday.
Kohl's shares have been up 19% since the beginning of the year and closed at $48.45 on Friday. That gives it a market cap of $7.3 billion, according to FactSet. Shares rose more than 5%, or $2.62, to $51.07 on Monday.
In response, Kohl said in an e-mail to the Associated Press the board and management team “continuously examine all opportunities for maximizing shareholder value. “
“Our strong performance this year demonstrates that our strategy is gaining traction and driving results,” according to the Kohl's statement.