Activist investor pushes Kohl's to oust its CEO and chairman

Activist investor Ancora Holdings is pushing Kohl’s to remove its chief executive and its chairman.

Ancora sent a letter to the board Thursday asking for the replacement of CEO Michelle Gass and Chairman Peter Boneparth. The firm, which has a 2.5% stake in Kohl’s, wants new leadership so the company can revamp its business.

“Kohl’s needs new leadership with demonstrated experience in cost containment, margin expansion, product catalog optimization and, most importantly, turnarounds,” says the letter, which has been obtained by CNBC.

The push comes a few months after Kohl’s terminated its talks to sell to Franchise Group. The company had been encouraged by activist investors to pursue a sale. Franchise Group proposed a bid of $60 per share before the uncertain economic environment forced it to bring its potential offer down to $53.

Gass came from Starbucks to take over as CEO for Kevin Mansell in 2018, with plans including the expansion of Sephora’s presence in Kohl’s stores. Ancora called her a “talented leader” and praised the Sephora partnership. Boneparth has been a director at the company since 2008 and became chairman this year.

“During the Boneparth era, the Board has created an environment in which Ms. Gass is no longer well-positioned to lead,” the Ancora letter said.

A spokesperson for Kohl’s said the company is committed to Gass.

“The Kohl’s Board unanimously supports Michelle Gass and her leadership team,” a company spokesperson wrote in a statement to CNBC. “The Board continues to actively engage with management to navigate the current retail environment.”

The activist investor, along with Macellum Advisors, attempted to seize control of Kohl’s board in 2021. In that attempt, Ancora, along with other stakeholders, pushed for new directors with retail experience, inventory reduction and the sale of Kohl’s real estate. Kohl’s pushed back against the endeavor, and the two parties settled to add three new directors.

Kohl’s received a bid on its property from Oak Street Real Estate Capital earlier in September. The real estate investor offered as much as $2 billion for the chain’s property, which Kohl’s would lease back for its store locations.

“Now you’ve got an environment where financing has changed so much that it may in fact be more attractive to use real estate as a monetization vehicle,” Boneparth told CNBC in a phone interview prior to the Oak Street offer.

Kohl’s and Ancora Holdings did not immediately respond to requests for comment.

Shares of Kohl’s are down about 43% so far this year.