A Kohl’s store in San Rafael, California.
Kohl’s is winding up talks to sell his business to the owner of The Vitamin Shoppe franchise grouptwo people familiar with the matter told CNBC on Thursday.
The people requested anonymity because a Kohl’s decision has not been publicly announced.
Representatives for Kohl’s and Franchise Group did not immediately respond to CNBC requests for comment.
This decision by Kohl’s comes as its stock price plummets and its sales decline. It has faced months of pressure from activist investors to seek a sale and shake up the business with a new slate of directors. It wasn’t immediately clear which way Kohl’s would go next.
Financing such a deal has also become more difficult due to volatility in the stock market and the broader economy, as the Federal Reserve raises interest rates to counter rising inflation. Walgreens Boots Alliance earlier this week it scrapped its plan to sell its UK pharmacy chain Boots, saying no third party was able to make a suitable offer due to the turmoil in global financial markets.
Franchise Group had been considering lowering its offer for Kohl’s to about $50 a share from around $60, CNBC reported last week, citing a person familiar with the matter. The change in thinking came as the outlook for the retail industry grew increasingly bleak, the person said, as fears of a recession mounted.
Franchise group in early June proposed a $60 per share offer to acquire Kohl’s at a valuation of approximately $8 billion. The two companies then entered an exclusive three-week window during which they can finalize any due diligence and final financial arrangements. That ran its course last weekend.
Kohl’s shares closed Thursday at $35.69. At one point during the day, the stock hit a 52-week low of $34.33. Kohl’s ended the day with a market valuation of about $4.6 billion, its shares down about 28% year-to-date.
Earlier this year, Kohl’s received a $64 per share offer from Starboard-backed Acacia Research, but felt the offer was too low.
Activist firm Macellum Advisors has been pushing for Kohl’s to consider a sale or other strategic alternatives. since January. Macellum was also arguing for Kohl’s to renew its list of directorsarguing that the retailer, under CEO Michelle Gass, has underperformed in recent years compared to its peers.
Macellum did not immediately respond to a request for comment.
However, in mid-May, Kohl’s shareholders voted to re-elect the company’s current list of 13 board directorsthus defeating Macellum’s proposal.
In recent weeks, the outlook for the retail industry has grown bleaker as consumers cut back on spending in certain discretionary categories, such as household items and apparel, amid inflation and the threat of an economic slowdown.
high-end furniture chain RH on Wednesday cut its revenue forecast in fiscal 2022anticipating softer consumer demand for its products in the second half of the year. Bed bath and beyond saw its sales plummet in its most recent quarter and dismissed its CEO.
Businesses are also seeing inventories pile up as shipments of goods arrive later than anticipated due to supply chain issues. Big Box Retailer Goal at the beginning of june investors warned that your profits will take a hit in the short term as you mark down unwanted items, cancel orders, and take aggressive steps to get rid of extra inventory.
Kohl’s sales for the three-month period ended April 30 fell to $3.72 billion from $3.89 billion in 2021. When it reported these figures in mid-May, the retailer also cut its profit and revenue forecasts for the full fiscal year, further muddying the outlook for a possible agreement.
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