Kohl's sales process is a 'disaster': sources

Kohl’s bleak financial results have raised concerns that the company’s auction to sell itself will be a failure – even if management continues to tout strong interest from potential suitors, The Post has learned.

The bids must be submitted “in the coming weeks,” Kohl’s confirmed Thursday after delivering a crappy first quarter in which it slashed its earnings and sales outlook for the year and said consumers are pulling back on their spending, resulting in a comparable 5.2. % decrease in turnover compared to a year ago.

Analysts had expected a 0.5% increase in revenue, as did potential bidders.

“I was shocked by the results,” said a source close to the sale process, adding: “I don’t believe there will be any acceptable bids now.”

Kohl’s smelly neighborhood is exacerbated by the turbulence in the financial markets.

“Nobody is signing up to fund a mega merger right now,” a lender at one of the largest banks told The Post. “There is no market.”

Kohl’s reported a 5.2% comparable store sales decline from a year ago.

AP

Banks are afraid to lend money in a highly leveraged deal against any company, the banker added.

Earlier this year, Kohl’s rejected a $9 billion offer from Starboard Value LP, which the company wanted to buy for $64 a share, or a 37% premium. Kohl’s said that was too low and took a so-called poison pill to prevent activist investors from acquiring more than 10% of its shares.

Now, enthusiasm for the deal has likely died down, sources told The Post, in part due to Kohl’s lack of transparency.

Last week, Kohl’s won a proxy fight to replace 10 of its directors. But they might not have confirmed the board had they known about the company’s most recent performance, sources said.

“Basically, the company knew their results stank and they didn’t tell anyone and they got the vote of the shareholders for their board of directors,” the source said close to the sale process.

The company has announced that there are at least 25 interested parties. Among the most prominent bidders are Canadian department store Hudson’s Bay Co., shopping center giant Simon Property and Canada-based Brookfield Asset Management — which bid $8.6 billion as The Post reported — and private equity giants Sycamore Partners and Leonard Green & Partners. .

Kohl’s won a proxy fight to replace 10 of its directors. But they might not have confirmed the board had they known about the company’s most recent performance, sources said.

REUTERS

Kohl’s chief executive, Michelle Gass, said on Thursday the company is “satisfied with the number of parties recognizing the value of our company and plan.”

The retailer only reluctantly agreed to initiate a sale process after activist investor Macellum Advisors first urged the company to do so in January. But sources tell The Post that the Wisconsin-based company may be rooting privately for a result in which bidders languish — despite the public image management put forth.

Still, others say a sale is still feasible, but at a bigger discount.

Potential buyers may lower their bids, but the company is an attractive acquisition — including a valuable real estate portfolio — that won’t undo a crappy quarter, another source said.

On Thursday, Kohl’s shares closed at $45.04 – well above the price of $63.11 just two months ago.

Kohl’s did not immediately respond for comment.

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