Kohl’s dismal financial results have raised fears that the company’s auction to sell itself would amount to bankruptcy — even as management continues to promote strong interest from potential suitors, The Post has learned.
Coles confirmed Thursday that offers are due in “the coming weeks” after it delivered a poor first quarter in which it cut its profit and sales forecast for the year, and said consumers are holding back on their spending, resulting in a 5.2% decline. Lower sales compared to last year.
Analysts expected a 0.5% increase in sales – and so did potential bidders.
“I was shocked by the results,” a source close to the sale said, adding, “I don’t think there will be any acceptable offers on offer now.”
Cole’s stinking quarter is exacerbated by turmoil in financial markets.
“Nobody is getting involved in financing a massive merger right now,” a lending source at one of the biggest banks told The Post. “There is no market.”
The banker added that banks are afraid to lend money in a highly leveraged deal against any company.
Earlier this year, Kohl’s rejected a $9 billion offer from Starboard Value LP, which wanted to buy the company for $64 a share, or a 37% premium. That was too low, Kohl’s said, and it adopted a so-called toxic pill to prevent activist investors from acquiring more than 10% of its shares.
Now, enthusiasm for the deal is likely to have waned, sources told The Post, in part due to a lack of transparency from Kohl’s.
Last week, Kohl’s won a proxy battle to replace 10 of its managers. The sources said they might not have confirmed the board of directors had they known of the company’s latest performance.
“Basically, the company knew its results were bad and didn’t tell anyone and got the shareholder vote for its board of directors,” said the source close to the sale.
The company said there were at least 25 interested parties. Among the most notable bidders are Canada’s Hudson’s Bay, shopping mall giant Simon Property, Canada’s Brookfield Asset Management — which offered $8.6 billion as reported by The Post — and private equity giants Sycamore Partners and Leonard Green & Partners.
Kohl’s CEO, Michelle Gass, said Thursday that the company is “delighted by the number of parties that recognize the value of our business and our plan.”
The retail chain only reluctantly agreed to start selling after activist investor Macellum Advisors pushed the company to do so in January. But sources tell The Post that the Wisconsin-based company may be privately seeking an outcome in which bidders fade away — despite the public image management being brought up.
However, others that I sell are still applicable but at a bigger discount.
Another source said potential buyers may cut their bids, but the company is preparing an attractive acquisition — including a valuable real estate portfolio — that a poor quarter doesn’t hold back.
On Thursday, Kohl’s shares closed at $45.04 — far from their $63.11 price just two months ago.
Kohl’s did not immediately respond to comments.