Engine Capital pushes Kohl's to review sale, separate e-commerce business

[December 06, 2021]    (Reuters) - U.S.-based hedge fund Engine Capital LP is pushing Kohl's Corp to consider a sale of the company or separate its e-commerce division to improve its lagging stock price.

Engine Capital, which owns a roughly 1% stake in Kohl's, said on Monday that the department store has underperformed the S&P 500 as well as other retailers in recent years.

The New York-based hedge fund also said that Kohl's should consider a strategic review of the whole company and even a sale to a buyer who can give a meaningful premium, adding it believes there are sponsors that would pay at least $75 per share.

Shares of Kohl's, which did not respond to a request for comment, were up about 3% in premarket trading.

Engine Capital's proposal comes at a time when retailers have doubled down on their online businesses following the e-commerce boom during the COVID-19 pandemic that drove people to shop online as they avoided crowds at brick-and-mortar stores.

Earlier in October, activist investor Jana Partners urged Macy's Inc to sell its digital business, following which the retailer said it was working with consulting firm AlixPartners to review its business structure.

Hudson's Bay Co-owned luxury department store chain Saks Fifth Avenue has said it would spin off its e-commerce segment, following a $500 million investment from private equity firm Insight Partners in the online business.

Engine Capital said Kohl's e-commerce business alone could be worth $12.4 billion or more. Wall Street Journal first reported the news on Sunday.

(Reporting by Deborah Sophia in Bengaluru; Editing by Shinjini Ganguli)

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