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(CNN)   Kohl's department stores have thrived where others have failed, increasing sales even during COVID. Naturally, a Wall Street activist who holds all of 5% of the company has a problem with this   (cnn.com) divider line
    More: Interesting, Department store, Activist hedge fund Macellum Advisors, Neiman Marcus, last year, activist investor, second time, Kohl's board, Target Corporation  
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1117 clicks; posted to Business » on 19 Jan 2022 at 10:05 AM (16 weeks ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook



44 Comments     (+0 »)
View Voting Results: Smartest and Funniest
 
2022-01-19 9:02:26 AM  
Because it worked so well for Kmart/Sears.
 
2022-01-19 9:05:58 AM  
Is that activist investor named Bezos or Walton, by chance?
 
2022-01-19 9:06:25 AM  
Kohl's entire business plan:

-Find a shirt that can be purchased anywhere, at regular price, for $23.99
-Attach price tag to shirt showing it has a regular price of $60.00
-Mark shirt as being "on sale" for half price, bringing the price down to $30.00. Schedule "sale" so that it never ends, ever.
-Mail customers regular coupons that can get them up to 20 percent off.
-Sell shirt to customer with coupon for $24.00.
 
2022-01-19 9:29:52 AM  

BizarreMan: Because it worked so well for Kmart/Sears.


Ayn Rand killed Sears and Kmart.
 
2022-01-19 9:50:43 AM  
mrs edmo loves that store. It's about the only place to buy anything nice here in flyover land.

I also loved buying my clothes at Penney's back in the day. Good stuff. I've never bought any clothing at Walmart, not even underwear, and I used to work there.
 
2022-01-19 10:14:44 AM  
I looked up Macellum Advisors and their "business model" is to buy a small percentage of a company, send nastygrams to said company's board to "change their board members" by adding one of them, then try to liquify the company from the inside.

The same types of people killed Toys-R-Us in the US and I effing hate these people.
 
2022-01-19 10:38:08 AM  

Pocket Ninja: Kohl's entire business plan:

-Find a shirt that can be purchased anywhere, at regular price, for $23.99
-Attach price tag to shirt showing it has a regular price of $60.00
-Mark shirt as being "on sale" for half price, bringing the price down to $30.00. Schedule "sale" so that it never ends, ever.
-Mail customers regular coupons that can get them up to 20 percent off.
-Sell shirt to customer with coupon for $24.00.


So, in order to meet regulatory stuff, their sale will end for like one cycle. Don't buy it during then.
 
2022-01-19 10:41:29 AM  
Vulture capitalism at it's worst.
 
2022-01-19 10:41:44 AM  
*its
 
2022-01-19 10:43:06 AM  

sid244: I looked up Macellum Advisors and their "business model" is to buy a small percentage of a company, send nastygrams to said company's board to "change their board members" by adding one of them, then try to liquify the company from the inside.

The same types of people killed Toys-R-Us in the US and I effing hate these people.


Yep. Destroyers of worlds.
 
2022-01-19 10:43:45 AM  

sid244: I looked up Macellum Advisors and their "business model" is to buy a small percentage of a company, send nastygrams to said company's board to "change their board members" by adding one of them, then try to liquify the company from the inside.

The same types of people killed Toys-R-Us in the US and I effing hate these people.


In a just world, people like this wouldn't see the light of day after doing this more than once.
 
2022-01-19 10:48:55 AM  

Pocket Ninja: Kohl's entire business plan:

-Find a shirt that can be purchased anywhere, at regular price, for $23.99
-Attach price tag to shirt showing it has a regular price of $60.00
-Mark shirt as being "on sale" for half price, bringing the price down to $30.00. Schedule "sale" so that it never ends, ever.
-Mail customers regular coupons that can get them up to 20 percent off.
-Sell shirt to customer with coupon for $24.00.


And then send out some Kohl's Cash to get the customers to return next week.

// I'm mildly surprised this isn't about making Kohl's Cash a cryptocurrency.
 
2022-01-19 10:58:47 AM  

sid244: I looked up Macellum Advisors and their "business model" is to buy a small percentage of a company, send nastygrams to said company's board to "change their board members" by adding one of them, then try to liquify the company from the inside.

The same types of people killed Toys-R-Us in the US and I effing hate these people.


There's nothing wrong with private equity activist shareholders in principle, when they firmly believe in the product and believe there are problems that preventing the company from being best in business, and of course the  shareholders will profit from that.  In fact, it should be welcome in many cases to prevent the good-old-boy network on the Board and ensure real management accountability.  Starboard Capital is an example of a decent one - they were profiled on Last Week Tonight complaining about Olive Garden saying their food is cheap and salty, and actually telling the company to spend more money on real ingredients and quality cookware.

The problem is that it's extremely easy for vultures to do the same thing and bleed the company dry for themselves while not caring about the business and its workers.  Reading about them like you did, these guys clearly fall in that category.

There needs to be a way to allow the former type in, while preventing the latter type and throwing them in prison where they belong.  No idea how to do that....
 
2022-01-19 11:11:49 AM  
I like that Kohls has become Amazon's returns department.  Every time I take an Amazon product back to Kohls, they give me $5-$10 in K-cash which is usually enough for something free off the clearance rack.
 
2022-01-19 11:26:58 AM  

ssaoi: I like that Kohls has become Amazon's returns department.  Every time I take an Amazon product back to Kohls, they give me $5-$10 in K-cash which is usually enough for something free off the clearance rack.


Same
 
2022-01-19 11:30:06 AM  

Pocket Ninja: Kohl's entire business plan:

-Find a shirt that can be purchased anywhere, at regular price, for $23.99
-Attach price tag to shirt showing it has a regular price of $60.00
-Mark shirt as being "on sale" for half price, bringing the price down to $30.00. Schedule "sale" so that it never ends, ever.
-Mail customers regular coupons that can get them up to 20 percent off.
-Sell shirt to customer with coupon for $24.00.


The Bed Bath & Beyond model.
 
2022-01-19 11:31:15 AM  
You'll have to pry my Kohl's Cash from my cold dead hands, you vulture!
 
2022-01-19 11:31:26 AM  
Arkanaut:

And then send out some Kohl's Cash to get the customers to return next week.

// I'm mildly surprised this isn't about making Kohl's Cash a cryptocurrency.


Kohl's could start selling NFTs. Like you go to Kohl's for some cheap casual dress pants and you come away with an NFT that gives you the right to say you own the concept of relaxed casual fit khaki chinos with new ComfortFit waistband and pleated pockets. Sure you can't wear the NFT. But now your ownership is oN tHe BlOcKcHaIn!!!! OMG! So k00l!!!!111!!!!
 
2022-01-19 11:31:40 AM  

tricycleracer: Pocket Ninja: Kohl's entire business plan:

-Find a shirt that can be purchased anywhere, at regular price, for $23.99
-Attach price tag to shirt showing it has a regular price of $60.00
-Mark shirt as being "on sale" for half price, bringing the price down to $30.00. Schedule "sale" so that it never ends, ever.
-Mail customers regular coupons that can get them up to 20 percent off.
-Sell shirt to customer with coupon for $24.00.

The Bed Bath & Beyond model.


tricycleracer: Pocket Ninja: Kohl's entire business plan:

-Find a shirt that can be purchased anywhere, at regular price, for $23.99
-Attach price tag to shirt showing it has a regular price of $60.00
-Mark shirt as being "on sale" for half price, bringing the price down to $30.00. Schedule "sale" so that it never ends, ever.
-Mail customers regular coupons that can get them up to 20 percent off.
-Sell shirt to customer with coupon for $24.00.

The Bed Bath & Beyond model.


No. BB&B has turned to Pier One pricing insanity.
 
2022-01-19 11:32:04 AM  

sid244: I looked up Macellum Advisors and their "business model" is to buy a small percentage of a company, send nastygrams to said company's board to "change their board members" by adding one of them, then try to liquify the company from the inside.

The same types of people killed Toys-R-Us in the US and I effing hate these people.


Bingo. They are mad the company is doing well because their business model is to pick apart the pieces of dying companies. So they need Kohl's to go private and change its business model so it dies. They aren't activist investors, they are vulture investors.
 
2022-01-19 11:48:39 AM  

sid244: I looked up Macellum Advisors and their "business model" is to buy a small percentage of a company, send nastygrams to said company's board to "change their board members" by adding one of them, then try to liquify the company from the inside.

The same types of people killed Toys-R-Us in the US and I effing hate these people.


They are using the same 30-yr old business plan run by Bain & Company.

--get inside company, either as a "consultant" or investor.
--produce reports which say your "plan" would be greatly profitable
--shout louder
--complete debt swap, whereby company is saddled with huge loans, from which you extract more huge fees
--flee
 
2022-01-19 11:51:50 AM  
This is like a penis pump for the stock market.  Pump and dump
 
2022-01-19 11:52:14 AM  

GardenWeasel: Vulture capitalism at it's worst finest.


This is the best that vulture capitalism will ever achieve. The entire idea of vulture capitalism should be considered an affront, and basically the companies / people engaging in it should be treated like those who buried people back in the 16th century Japan. Sometimes, rarely, it is necessary. Today, more often than not, it's a$$holes just trying to manipulate share price to make a buck. See also: Oshkosh Corporation vs Carl Icahn. Carl got his money either way, but would've made a few percent more if he managed to strip the company, so he sought to destroy it. No reason other than making a couple bucks extra, even if it did f**k over a few thousand workers.
 
2022-01-19 12:02:38 PM  

Pocket Ninja: Kohl's entire business plan:

-Find a shirt that can be purchased anywhere, at regular price, for $23.99
-Attach price tag to shirt showing it has a regular price of $60.00
-Mark shirt as being "on sale" for half price, bringing the price down to $30.00. Schedule "sale" so that it never ends, ever.
-Mail customers regular coupons that can get them up to 20 percent off.
-Sell shirt to customer with coupon for $24.00.


JC Pennys tried to ditch their "sales" bs and lost business because of it.

People want to go through this bs.
 
2022-01-19 12:09:59 PM  

BizarreMan: Because it worked so well for Kmart/Sears.


What use is a profitable company to Wall St. if they can't target it for a good ol' fashioned bust-out?
 
2022-01-19 12:40:17 PM  

Rattlesnake Rattles Me: JC Pennys tried to ditch their "sales" bs and lost business because of it.

People want to go through this bs.


Yeah, my mom used to get a major dopamine high over that crap. I got so frustrated as a teenager who was dragged around the region in the hunt for minor sales and couponing in the pre-internet era that I charted it out versus gas costs and MSRP to show how ridiculous it was.

"You're grounded."
"Does that mean I get to stay home?"
"No."

Anyways, don't get between mama and her fix.
 
2022-01-19 12:56:53 PM  

Tomfoolery Rules Over Logical Living: sid244: I looked up Macellum Advisors and their "business model" is to buy a small percentage of a company, send nastygrams to said company's board to "change their board members" by adding one of them, then try to liquify the company from the inside.

The same types of people killed Toys-R-Us in the US and I effing hate these people.

There's nothing wrong with private equity activist shareholders in principle, when they firmly believe in the product and believe there are problems that preventing the company from being best in business, and of course the  shareholders will profit from that.  In fact, it should be welcome in many cases to prevent the good-old-boy network on the Board and ensure real management accountability.  Starboard Capital is an example of a decent one - they were profiled on Last Week Tonight complaining about Olive Garden saying their food is cheap and salty, and actually telling the company to spend more money on real ingredients and quality cookware.

The problem is that it's extremely easy for vultures to do the same thing and bleed the company dry for themselves while not caring about the business and its workers.  Reading about them like you did, these guys clearly fall in that category.

There needs to be a way to allow the former type in, while preventing the latter type and throwing them in prison where they belong.  No idea how to do that....


I agree 10,000%.  Well put.
 
2022-01-19 1:09:35 PM  

Pocket Ninja: Kohl's entire business plan:

-Find a shirt that can be purchased anywhere, at regular price, for $23.99
-Attach price tag to shirt showing it has a regular price of $60.00
-Mark shirt as being "on sale" for half price, bringing the price down to $30.00. Schedule "sale" so that it never ends, ever.
-Mail customers regular coupons that can get them up to 20 percent off.
-Sell shirt to customer with coupon for $24.00.


See also Bed Bath and Beyond
 
2022-01-19 1:13:00 PM  

sid244: I looked up Macellum Advisors and their "business model" is to buy a small percentage of a company, send nastygrams to said company's board to "change their board members" by adding one of them, then try to liquify the company from the inside.

The same types of people killed Toys-R-Us in the US and I effing hate these people.


It's more cost effective to buy a competitor and shut it down than it is to compete. This isn't a new strategy
 
2022-01-19 1:21:19 PM  

ssaoi: I like that Kohls has become Amazon's returns department.  Every time I take an Amazon product back to Kohls, they give me $5-$10 in K-cash which is usually enough for something free off the clearance rack.


Step 1: Hang up sign that says Amazon Return Center.

Step 2: Frustrated Amazon shoppers come to your store.

Step 3: Hand out discount coupons for your own merchandise.

Step 4: New customers pick out stuff, find coupon isn't valid for it, buy it anyway because they just sent the same thing back to Amazon. Profit!

Step 5: Put Amazon returns on your racks. Profit!
 
2022-01-19 1:22:08 PM  

Prank Call of Cthulhu: Arkanaut:

And then send out some Kohl's Cash to get the customers to return next week.

// I'm mildly surprised this isn't about making Kohl's Cash a cryptocurrency.

Kohl's could start selling NFTs. Like you go to Kohl's for some cheap casual dress pants and you come away with an NFT that gives you the right to say you own the concept of relaxed casual fit khaki chinos with new ComfortFit waistband and pleated pockets. Sure you can't wear the NFT. But now your ownership is oN tHe BlOcKcHaIn!!!! OMG! So k00l!!!!111!!!!


Pleated pockets?
 
2022-01-19 1:25:00 PM  

pjbreeze: This is like a penis pump for the stock market.  Pump and dump


That's how I describe your Mom
 
2022-01-19 3:07:54 PM  

Pocket Ninja: Kohl's entire business plan:

-Find a shirt that can be purchased anywhere, at regular price, for $23.99
-Attach price tag to shirt showing it has a regular price of $60.00
-Mark shirt as being "on sale" for half price, bringing the price down to $30.00. Schedule "sale" so that it never ends, ever.
-Mail customers regular coupons that can get them up to 20 percent off.
-Sell shirt to customer with coupon for $24.00.


True, but they are the only ones in my area with a stocked tall section. If I had another option I would take it.
 
2022-01-19 3:10:06 PM  

GardenWeasel: Vulture capitalism at it's worst.


Not quite vulture capitalism, but I get your point. This is more about the idea of the "activist investor", an asshole with just enough stock to be a pain in the ass and more than enough ego to think he should run the show.
 
2022-01-19 3:12:34 PM  
Fark user imageView Full Size
 
2022-01-19 3:14:21 PM  

GardenWeasel: sid244: I looked up Macellum Advisors and their "business model" is to buy a small percentage of a company, send nastygrams to said company's board to "change their board members" by adding one of them, then try to liquify the company from the inside.

The same types of people killed Toys-R-Us in the US and I effing hate these people.

Yep. Destroyers of worlds.


And Children's Palace. Do you have any idea how cool it was as a kid to walk into a store that looks like a giant castle in order to buy a new Lego set?
 
2022-01-19 3:56:59 PM  
This.

They are using the same 30-yr old business plan run by Bain & Company.

--get inside company, either as a "consultant" or investor.
--produce reports which say your "plan" would be greatly profitable
--shout louder
--complete debt swap, whereby company is saddled with huge loans, from which you extract more huge fees
--flee


The company that I've worked at for ten years is going to be acquired by Bain later this year in a leveraged buyout.  I'm worried this means that this is the beginning of the end for the company, as the 'leveraged buyout' could possibly mean that they are going to borrow $15 billion and then place that debt on the balance sheet of my employer.  They'll extract huge fees to 'service' that debt, and the constant outflow of cash means that the company will gradually weaken until eventually it's carcass will be sold for scrap to a competitor.

I'm hoping that I'm wrong, but it seems like Bain has a reputation for this strategy.
 
2022-01-19 4:28:35 PM  

Coredatum: This.

They are using the same 30-yr old business plan run by Bain & Company.

--get inside company, either as a "consultant" or investor.
--produce reports which say your "plan" would be greatly profitable
--shout louder
--complete debt swap, whereby company is saddled with huge loans, from which you extract more huge fees
--flee

The company that I've worked at for ten years is going to be acquired by Bain later this year in a leveraged buyout.  I'm worried this means that this is the beginning of the end for the company, as the 'leveraged buyout' could possibly mean that they are going to borrow $15 billion and then place that debt on the balance sheet of my employer.  They'll extract huge fees to 'service' that debt, and the constant outflow of cash means that the company will gradually weaken until eventually it's carcass will be sold for scrap to a competitor.

I'm hoping that I'm wrong, but it seems like Bain has a reputation for this strategy.


The amazing thing to me isn't that this has happened.

It's that it can happen again. Bain, and other vulture companies, have done this many times. Borrow a huge amount of money, load the company with debt, suck out all the money, then declare bankruptcy, leaving the employees, the vendors, the financiers, etc out in the cold.

How is it that anyone would be willing to LEND THEM MONEY ANYMORE? You KNOW they're going to stiff you. You KNOW they will. How can ANY bank even consider lending Bain the money to do these buyouts? It won't be paid back! They'll declare bankruptcy after taking all that cash as fees. How do we know this? Because this is case study #734, not #1. It baffles me. Any bank worth their salt you'd think would look at these clowns and run away, not lend them a red cent, and yet they do it over and over again.
 
2022-01-19 4:50:31 PM  

rummonkey: GardenWeasel: sid244: I looked up Macellum Advisors and their "business model" is to buy a small percentage of a company, send nastygrams to said company's board to "change their board members" by adding one of them, then try to liquify the company from the inside.

The same types of people killed Toys-R-Us in the US and I effing hate these people.

Yep. Destroyers of worlds.

And Children's Palace. Do you have any idea how cool it was as a kid to walk into a store that looks like a giant castle in order to buy a new Lego set?


Yes, yes I do.  I loved Children's Palace growing up.
 
2022-01-19 5:24:34 PM  

Pocket Ninja: Kohl's entire business plan:

-Find a shirt that can be purchased anywhere, at regular price, for $23.99
-Attach price tag to shirt showing it has a regular price of $60.00
-Mark shirt as being "on sale" for half price, bringing the price down to $30.00. Schedule "sale" so that it never ends, ever.
-Mail customers regular coupons that can get them up to 20 percent off.
-Sell shirt to customer with coupon for $24.00.


Spoiler: Having worked in them, that's how most department stores work
 
2022-01-19 6:39:35 PM  

Pocket Ninja: Kohl's entire business plan:

-Find a shirt that can be purchased anywhere, at regular price, for $23.99
-Attach price tag to shirt showing it has a regular price of $60.00
-Mark shirt as being "on sale" for half price, bringing the price down to $30.00. Schedule "sale" so that it never ends, ever.
-Mail customers regular coupons that can get them up to 20 percent off.
-Sell shirt to customer with coupon for $24.00.


I think they get away with considering a BOGO not a sale, because hey, it's full price if you buy just one.
 
2022-01-19 8:29:48 PM  
Rolling Stone had an excellent article about Mitt Romney and Bain Capital and how these kinds of operations work.
 
2022-01-19 8:32:46 PM  
Kohls is getting massive foot traffic by acting as Amazon returns drop-off locations.
 
2022-01-19 11:18:40 PM  

sid244: Tomfoolery Rules Over Logical Living: sid244: I looked up Macellum Advisors and their "business model" is to buy a small percentage of a company, send nastygrams to said company's board to "change their board members" by adding one of them, then try to liquify the company from the inside.

The same types of people killed Toys-R-Us in the US and I effing hate these people.

There's nothing wrong with private equity activist shareholders in principle, when they firmly believe in the product and believe there are problems that preventing the company from being best in business, and of course the  shareholders will profit from that.  In fact, it should be welcome in many cases to prevent the good-old-boy network on the Board and ensure real management accountability.  Starboard Capital is an example of a decent one - they were profiled on Last Week Tonight complaining about Olive Garden saying their food is cheap and salty, and actually telling the company to spend more money on real ingredients and quality cookware.

The problem is that it's extremely easy for vultures to do the same thing and bleed the company dry for themselves while not caring about the business and its workers.  Reading about them like you did, these guys clearly fall in that category.

There needs to be a way to allow the former type in, while preventing the latter type and throwing them in prison where they belong.  No idea how to do that....

I agree 10,000%.  Well put.


They could model it on some kind of insider trading law.
 
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