Kohls’ management team and board have many more questions that need to be answered, as activist investors continue their long-running battle against off-mall retailers.
“It was disturbing to learn yesterday that the current board appears to have withheld material information from shareholders about Kohl’s condition in the run-up to this year’s crucial annual meeting,” Jonathan Duskin, managing partner of Masselam Advisors, said in a shocking new letter. “We believe that all shareholders of the company should feel betrayed and angry about the huge lack of revenue this quarter, the loss of guidance and the impending departure of two senior executives.”
5% shareholder of Masselam Kohls.
Kohls did not immediately respond to a request from Yahoo Finance for comment on Massellam’s new letter.
Duskin’s comments come after a day of inadequate earnings for Kohli.
Struggling retailer – which has been running for months, which sources say is a flawed process to sell itself to Yahoo Finance – said first-quarter sales fell 5.2%. Inventory levels have exploded 41% since a year ago.
Kohl’s outlook for its full-year profit fell from $ 6.45 to $ 6.85 per share, from $ 7 to 50 7.50.
The earnings whiff and caution have raised concerns that Kohls will continue to struggle for several quarters.
“While we acknowledge the transient nature of these headwinds,” said Gabriella Karbonn, an analyst at Deutsche Bank, “we think investors are wary of the level of improvement baked in the second half, comparable sales related to lower single digits compared to lower 1 digits and 2Q digits.” In the mid-unit number, the SG&A dollar is improving year after year in lower single digits, with higher single digits in the second half versus higher single digits in the first half, and higher inventory levels coming from 1Q. “
A source told Yahoo Finance that as a result of the bad quarter, Kohls may now be unable to sell himself. And if it does reach an agreement with a suitor, it will be significantly lower than the business sale months ago.
So in practice, Kohl’s management and the board are primarily seen as obstructing a process to maximize shareholder value.
Here is Masselam’s full letter:
“The extremely disappointing results of this quarter do not change the fact that Kohls is a stand-alone retailer where there is a lot of long-term opportunity for sales growth, margin expansion and higher earnings. Based on Kohl’s and our extensive analysis of the retail sector, we can say with great confidence that yesterday’s results are simply the result of a weak board and management configuration leading to a flawed strategic plan and inability to implement. Under the proper supervision and leadership of those who have sufficient skills and an effective strategy, we firmly believe that Kohl’s will consistently deliver superior operating and financial results.
It was disturbing to learn yesterday that the current board seems to have withheld material information from shareholders about Kohl’s condition in the run-up to this year’s main annual meeting. We believe that all shareholders in the company should feel betrayed and outraged by the fact that the quarterly huge revenue shortfall, declining guidance and the impending departure of two senior executives, who probably supported Kohl’s three-year strategy development in March 2022, last week’s anniversary Not disclosed before the meeting.
If any of the current managers were aware of this material information prior to the Annual Meeting, then their involvement in any decision to withhold the news before a commemorative shareholder vote suggests a clear violation of our fiduciary duty. If any of the current directors are kept in the dark and are unaware of this information before the annual meeting, we urge the board to conduct its own independent investigation and begin its own investigation into how the elected directors and shareholders were so confused. And what ways do they have.
Either way, Kohl’s will immediately replace three of our nominees – three of whom have served on the board for a long time – including a shareholder representative in Masselum. Note that Institutional Shareholder Services, Inc., a leading independent proxy advisory firm, recommended earlier this month that shareholders vote to elect multiple Maslem nominees, including former Massey’s, Incorporated Chief Merchandising Office, Inc. Inc. Chief. Financial Officer Pamela Edwards.
At this point, we believe that the current board has taken away Kohl’s oversight and the right to continue reviewing offers, contrary to the company’s internal plans – and that it should be committed to accepting the highest-paid acquisition offer immediately upon completion of the sales process.
We are actively pursuing claims against the Board and will take necessary legal action to protect our interests as a long-term shareholder and the interests of all our associate shareholders. “
Brian Suzy A great editor and Yahoo is anchored in finance. Follow Suzy on Twitter @ Briansoji And then LinkedIn.
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