Kohl’s shareholders have re-elected all 13 of its board members, according to a preliminary vote count released by the retailer on Wednesday.
For months the department store has been tussling with activist investors over the makeup of its board and other changes to its operations, including an e-commerce spinoff or outright sale.
Although in February Kohl’s board adopted a poison pill to gird itself against a hostile takeover, the company has also said that it is entertaining serious bids. Canadian retail company Hudson's Bay Co. and J.C. Penney owners Simon Property Group and Brookfield are rumored to be among its suitors.
Macellum Advisors, which successfully pushed to rework the makeup of Kohl's board last year, two days ago cited Kohl's share price and "capital-intensive and risky plan" among its reasons for further change. In rejecting the push for another shakeup, Kohl's investors are signaling a vote of confidence in CEO Michelle Gass and her strategy, according to GlobalData Managing Director Neil Saunders.
That includes running Kohl's as a retail business rather than treating it as a financial instrument, he said in emailed comments.
"In our view, this is the right outcome as, while Kohl’s needs to do more to boost top-line growth, it has more chance of doing that under current management than a team focused on monetizing Kohl’s via selling real estate and divesting other assets," he said. "Those activities, while legitimate, are not conducive to the long-term health of the company; they are short-term plays that allow investors to extract easy money."
In a statement, Board Chairman Peter Boneparth said the company continues to review "strategic alternatives." That presumably includes a potential sale.
“While we have had differences with Macellum, this Board is committed to serving the interests of all our shareholders," he said. "The Board remains focused on running a robust and intentional review of strategic alternatives while executing our strategy to drive shareholder value. We appreciate the feedback we have received from our shareholders over the past several months and look forward to engaging with them further.”
The pressure is now on for the retailer's leadership to come through.
"While Kohl’s management will feel relief, the rejection of demands for change now puts the onus on them to deliver in the year ahead," Saunders said. "Weak results that fall below what peers are delivering will only intensify pressure on management and will amplify calls for change and possibly encourage more bids for the company. This ongoing distraction is not helpful to the smooth running of the business, so it is imperative that Kohl’s demonstrates compelling plans that are capable of delivering."