It seems like almost everything is on sale at Kohl’s—except for Kohl’s.
After a lengthy process—spurred by activist investor Macellum Advisors—during which the department store publicly shopped for suitors, Kohl’s has decided to end its strategic review process and stay an independent public company, at least for the time being.
Following a sales process guided by Goldman Sachs, the company talked with 25 prospective bidders, before settling on the Franchise Group, owners of the Vitamin Shoppe, which was offering $60 a share.
Since the Franchise Group is built on “franchised and franchisable businesses,” some retail analysts predicted “a disaster in the making,” wondering just what the Franchise Group was bringing to the table.
We won’t have to find out. The “current financing and retail environment”—including the Federal Reserve’s decision to raise interest rates in an effort to curb inflation—spurred the Franchise Group to lower its bid to $53, Kohl’s said, eventually leading the sale to be called off.
“Despite a concerted effort on both sides…the board determined that it simply was not prudent to continue pursuing a deal,” said board chair Peter Boneparth in a statement issued Friday, adding the board was still open to opportunities to “maximize shareholder value.”
On Thursday, Bank of America analyst Lorraine Hutchinson downgraded Kohl’s and other department stores to “underperforming,” in view of what it saw as retail headwinds.
In Friday’s statement, the company lowered its second-quarter comp estimate from a low-single-digit drop to a high-single-digit fall. The announcements caused the company’s shares to plummet; at the time of publication, they were trading at $28 per share.
In his statement, Boneparth called Kohl’s a “financially strong company that generates substantial free cash flow and has a clear plan to enhance its competitive position and improve performance over the long term.”
Photo courtesy of Kohl’s
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