Kohl's sees improving sales, easing some activist pressure
Kohl’s Corp. gave an upbeat sales outlook and announced plans to reinstate its dividend, bolstering management’s strategic plans amid pressure from a group of activist investors.
The company says 2021 net sales will grow by a mid-teens percentage range. Resuming its capital allocation strategy is also on the agenda this year, it said, from bringing back its dividend to resuming a share repurchase program.
From Kohl’s 2021 guidance, you can still see the impact of Covid-19 shutdowns and disruption. When the retailer released 2020 guidance last March just ahead of the pandemic, it saw earnings per diluted share of $4.20 to $4.60 for that year. For 2021, it sees earnings per share in the range of $2.45 to $2.95. Kohl’s CEO Michelle Gass in an interview on Tuesday said this year is a “building block” to get the retailer to its 2023 goals.
Kohl’s also reported year-end sales results Tuesday, but investors shouldn’t be surprised by the numbers: The company said in early February preliminary fourth-quarter results showed an 11% decline in same-store sales and 10% drop in total revenue.
The results come as Kohl’s tries to push back against a group of activists, which include Macellum Advisors GP LLC and Ancora Holdings Inc., who are seeking nine board seats and have said the company should cut back its inventory and stop offering “promotional gimmicks.”
In an interview on Tuesday, Gass responded to activist pressure by saying that she and the board are “open to all ideas that can help us create shareholder value” but doesn’t support adding nine directors to the board. Her response was in line with Kohl’s statement released last week.
The shares rose less than 1% as of 8:46 a.m. Tuesday in premarket trading in New York. The stock rose 40% this year through Monday.