An activist is pressuring Kohl’s (NYSE:KSS) to consider either a sale or a separation of its online business, following a similar move by the department store chain Saks Fifth Avenue.
The New York-based hedge fund Engine Capital wants Kohl’s to explore the two alternatives to try to boost its stock price, it said in a letter sent to Kohl’s board that was published publicly on Monday. Engine Capital owns a roughly 1% stake in Kohl’s.
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 that of Macy’s (NYSE:M) but more than Nordstrom’s (NYSE:JWN) . Kohl’s stock is up about 19% year to date, underperforming the S&P 500. Its shares rose $2.25, or 4.6% in early trading Monday, to $50.70.
Engine Capital said in its letter that assuming Kohl’s brings in online sales revenue of about $6.2 billion, Kohl’s digital business alone would be worth $12.4 billion.
Engine Capital also said it believes that there are private equity firms that would pay at least $75 per share for the retailer. And the group of investors said that talks with potential buyers suggest they could further monetize Kohl’s real estate.
"Kohl’s has a unique retail footprint relative to many mall-based retailers as well as a growing ecommerce presence," Engine Capital said.
A spokeswoman for Kohl’s said the retailer’s board and management team are continuously examining opportunities to maximize shareholder value.
"Our strong performance this year demonstrates that our strategy is gaining traction and driving results," the spokeswoman said in an emailed statement.
