As the retail industry shudders from the impact of the pandemic and the growth of online shopping, department store chain Kohl's may be breathing its last breath. The brand confirmed last month that it has received "letters expressing interest in acquiring the company," and some industry experts are speculating that a deal may be imminent. A buy-out could mean the end of another nationwide chain, but it could also be a boon to investors.
The news of Kohl's financial struggles made headlines last month because it caused some serious uproar in the stock market. The company's share prices shot up by 33 percent on Monday, Jan 24 after it announced the buy-out offers, according to a report by The New York Post. A financial firm called Macellum Advisors publicly offered to buy Kohl's outright for more than the price of each share, and before long two other groups made competing offers. So far, Kohl's executives have not disclosed their plans going forward, so a buy-out is still on the table. In the meantime, individuals are trying to cash in on the raging stock prices.
The cold hard numbers in these offers might be what really drove stock prices up. One of the activist investor groups offered $64 per share for Kohl's – even filing an official 8K form with the Securities Exchange Commission. The company also said that it had discussed the offer with representatives of Kohl's.
Sycamore made a competing offer of $65 per share. In a follow-up statement published by CNBC, Kohl's said: "The Kohl's board of directors will determine the course of action that it believes is in the best interests of the company and its shareholders."
In their pitches, the investment firms have pointed out Kohl's lackluster sales performances in recent years – even compared to its competitors in the struggling retail business. These investors are especially interested in the real estate owned by Kohl's. Kohl's has declined offers like this before, and has said that it intends to unveil a new company strategy on investor day, which is March 7.
Investors have been similarly insistent in going after Macy's. In recent years Macy's has closed some stores and sold off real estate, which helped the company in the short term but did little to improve the brick-and-mortar market. Investors are hoping to see this strategy employed on a wider scale.
It's unclear what investors have in mind for all the commercial real estate currently tied up in struggling shopping malls all over the U.S. There have been plenty of proposals to use these public spaces for something new – both from profiteers and community organizers. For now, however, companies like Macy's and Kohl's are holding onto their assetts.