Baird analyst Mark Altschwager lowered the firm's price target on Kohl's to $48 from $52 and keeps an Outperform rating on the shares. The analyst noted Kohl's beat Q4 expectations and issued guidance which encapsulated consensus estimates. He said the company is taking a more aggressive strategy to stabilize the business and position itself for future growth. He does not expect the shares to reflect a brighter outlook until management demonstrates progress.
Macellum Advisors, a long-term holder of nearly 5% of the outstanding common shares of Kohl's, issued the following statement regarding the company and its board of directors attributable to its managing partner, Jonathan Duskin: "This quarter's extremely disappointing results do not change the fact that Kohl's is a uniquely positioned retailer with tremendous long-term opportunities to increase sales, expand margins and produce superior earnings. Based on our extensive analysis of Kohl's and the retail sector, we can say with great conviction that yesterday's results are simply a consequence of a weak Board and management configuration leading to a flawed strategic plan and an inability to execute. Under the right oversight and leadership that has sufficient expertise and a viable strategy, we firmly believe Kohl's will consistently deliver superior operating and financial results. It was alarming to learn yesterday that the current Board appears to have withheld material information from shareholders about the state of Kohl's in the lead-up to this year's pivotal annual meeting. We believe all of the Company's shareholders should feel betrayed and outraged by the fact that the quarter's massive earnings miss, reduced guidance and the imminent departures of two senior executives, who presumably supported the development of Kohl's' three-year strategy released in March 2022, were not disclosed prior to last week's annual meeting. If any of the current directors were aware of this material information prior to the annual meeting, their involvement in any decision to withhold the news prior to a monumental shareholder vote suggests to us a clear breach of fiduciary duty. If any of the current directors were kept in the dark and not aware of this information prior to the annual meeting, we urge this faction of the Board to retain independent counsel and begin its own investigation to understand how select directors and shareholders were so grossly misled and what recourse they have. Either way, Kohl's should immediately appoint three of our nominees - including a shareholder representative from Macellum - to the Board to replace three long-serving incumbents. Keep in mind that Institutional Shareholder Services, Inc., a leading independent proxy advisory firm, recommended earlier this month that shareholders vote to elect multiple Macellum nominees, including former Macy's, Inc. Chief Merchandising Officer Jeff Kantor and former L Brands, Inc. Chief Financial Officer Pamela Edwards. At this point, we believe the current Board has forfeited its right to continue to oversee Kohl's and review offers versus the Company's internal plan - and it should immediately commit to accepting the highest financed acquisition offer received at the conclusion of the sale process. We are actively exploring claims against the Board and will take legal action, if necessary, to protect our interests as a major long-term shareholder and the interests of all our fellow shareholders."
Citi analyst Paul Lejuez lowered the firm's price target on Kohl's to $55 from $67 and keeps a Buy rating on the shares. The company missed Q1 sales/margins and lowered guidance for the year, but considering what we've heard so far this earnings season, this was not a big surprise, especially considering the poor weather, Lejuez tells investors in a research note. The analyst believes expectations for Kohl's are low and the stock's risk/reward is favorable.
The company said, "The Kohl's Board is thoroughly testing the Company's standalone strategic plan against potential alternatives and has designated its Finance Committee to lead the ongoing review of expressions of interest. The Board engaged Goldman Sachs to conduct a broad process to explore strategic alternatives, which to date has included engagement with over 25 parties. Multiple bidders have been invited to a data room containing over 550,000 pages across over 55,000 documents, as well as meetings with management. While preliminary, non-binding proposals have been received, further diligence is ongoing and the Board has requested fully-financed final bids to be submitted in the coming weeks."
Consensus $7.18. Cuts FY22 revenue view to flat to up 1% from up 2%-3%, consensus $18.91B. Sees FY22 operating margin 7%-7.2%. "Regarding our review of strategic alternatives, we continue to engage with multiple interested parties. We have formally communicated the specific procedures for the submission of actionable bids due in the coming weeks. We continue with our detailed diligence phase and are pleased with the number of parties who recognize the value of our business and plan," said Gass.