Customers leave a Kohl’s store on November 12, 2015 in San Rafael, California.
Justin Sullivan | Getty Images News | Getty Images
The group of activists seeking control of Kohl’s board of directors released a letter Friday morning saying the retailer’s latest quarterly results were flawed and underscored the need for a revised strategy.
“The board of directors seems to be satisfied and only marginally better than the worst companies in the retail sector,” said the group in a letter to the shareholders of Kohl. “‘Best of the Worst’ is neither a viable strategy nor does it satisfy shareholders like us who seek long-term superior performance.”
“Kohl’s is tremendously well positioned with off-mall locations, which has significant advantages, but it also means Kohl’s is up against thriving off-mall players like TJX Companies, Ross Stores, Target, Old Navy and Burlington,” he added added.
The investor group, which consists of Macellum Advisors, Ancora Holdings, Legion Partners Asset Management and 4010 Capital, together has a 9.5% stake in Kohl’s.
In late February, Kohls turned down an attempt to take control of his board, arguing that doing so would disrupt the momentum in reshaping his business.
When Kohl’s reported fourth quarter earnings earlier this week, he beat Wall Street estimates, pointing to stronger growth in 2021 as his sales growth initiatives (like partnering with makeup retailer Sephora) are likely to take effect. Kohl’s also announced that it would reinstate the dividend and buy back shares.
Additionally, some new details were cited to allay a number of activists’ frustrations, including the fact that Kohl’s gained more than 2 million new customers in 2020 thanks to its Amazon returns service.
The group of activists said Friday, however, it remains skeptical that Kohl’s Amazon return program will add to the revenue.
Kohl’s shares fell less than 1% in premarket trading. The stock is up about 50% over the past 12 months. Kohl’s has a market cap of $ 8.64 billion, which is larger than Nordstrom and Macy’s.
A Kohl’s representative did not immediately respond to CNBC’s request for comment.
Read the activists’ full letter here.