“Traditional retailers bristle at the idea, but shareholders care about generating value, and Richard Baker cares. Separating a retailer from its dot-com operations flies in the face of a decade’s worth of omnichannel coming together, where the industry at large pushed to eliminate the divisions between their bricks and clicks to focus more squarely on their relationships with shoppers and providing “seamless” shopping experiences, channel to channel. Costco and Walmart also have huge and dominant store operations, and dot-com revenues that are relatively small in comparison to their businesses overall, unlike Kohl’s and Macy’s.
and Walmart Inc., which have higher stock prices than Macy’s Inc. It would not be considered a solution for companies such as Costco Wholesale Corp. “This is not a solution for every retailer, but it is a solution for a number of stuck-in-the-middle retail businesses with legacy stores,” said the source.
The process involves participation by store executives, lawyers and accountants, the development of a feasibility study, new legal identities, and creating scores and scores of operating and service agreements between the store and dot-com businesses. “It requires months of difficult work, up to a year,” to execute, the expert said. You get fresh capital, a chance to invest in a high-growth digital business, money to hire new people, and you expand the business, and can still invest in the slower growth store business. “It is the most logical thing for a retailer to do at the moment. “The only crazy thing about this idea is that Saks is the only one who thought of it,” said one retail expert. Pureplay e-tailers have generated larger stock market valuations than those with online and brick-and-mortar operations, but the long-term value of separating the two remains to be seen. Opinions are mixed on whether separating a retailer’s dot-com and store operations into separate companies is a good strategy. The settlement would have to expire before the investors could act again. An additional independent director identified by Kohl’s and agreed to by the investor group, former Lululemon chief executive officer Christine Day, also joined the board.Īlong with last spring’s pact, the investor group agreed to abide by certain customary standstill provisions until 30 days prior to the close of the nomination window for the company’s 2022 annual shareholder meeting. T wo independent directors nominated by the activist group - Margaret Jenkins and Thomas Kingsbury - were put on the board. In April, Kohl’s entered into an agreement with activist investors fighting for fresh blood on the retailer’s board. The company could sell a big chunk of the e-commerce operation and use the money to buy back stock, pay down debt and invest in dot-com for growth. Kohl’s, a public company, could spin off its dot-com business through an initial public offering, or a carve out in some other way. Kohl’s generated $15.96 billion in total sales in 2020 and $19.97 billion in 2019. This year, with most Americans vaccinated against COVID-19, many are inclined to return to shopping in stores, meaning some business would shift back to brick-and-mortar retail. They’re widely seen as positive maneuvers sharpening the Kohl’s brand identity and providing a simpler and more relevant shopping experience.Į-commerce at Kohl’s is estimated at around 30 to 35 percent of the total volume, though in the fourth quarter last year, it was north of 40 percent of sales.
At Kohl’s, there have been significant merchandising advancements, including rolling out Sephora online and in stores this year as well as bolstering casual and active offerings with leading brands like Nike, Adidas, Cole Hahn, Calvin Klein, Tommy Hilfiger and Lands’ End, and emphasizing inclusivity in the product offerings. Still, a stock price doesn’t always reflect the strength of a retailer’s operations. Bank of America placed an “underperform” rating on the stock, down from “buy.” Bank of America reduced its price target for Kohl’s stock down to $48 from $75. The stock wasn’t helped in September when Bank of America slashed its investment recommendation for the retailer by two levels, citing supply chain issues. Kohl’s stock is trading at around $47, was over $64 last spring, and has ranged from around $30 last year to more than $80 in the fall of 2018.