Kohl’s Officially Done For?

Kohl's was playing with fire when it put its business up for sale, but does its latest decision serve to seal its fate?

By Kristi Eckert | Published


After years of sagging sales and repeated attempts to revitalize its business, Kohl’s effectively decided to throw in the towel. The chain put its business up for sale, in hopes that the buyer would be able to do what the struggling retailer had been unable to. There was a slew of offers almost immediately, and Kohl’s quickly went into acquisition negotiations with the highest bidder. However, in a surprising turn of events, Kohl’s has decided to rescind its sale offer and take matters back into its own hands. Ironically, that just may have been the most brilliant move the company has made in recent years. If they play their cards right it could save them from an untimely fatal fate. 

Franchise Group, a holdings company that owns The Vitamin Shoppe, was the entity in talks to acquire Kohl’s. If the acquisition had gone through it would have almost certainly meant the death of Kohl’s. The sale itself was problematic in nature. The terms of Franchise Group’s offer necessitated that many Kohl’s properties be liquidated immediately to satisfy the sale, as the company was only willing to put up $1 billion of its own money. 

Additionally, as its name suggests, Franchise Group operates most of its business off of franchise models. And it’s likely that the company had plans to transition Kohl’s to that model if the acquisition did indeed happen. But many industry experts saw this as unsustainable for a business like Kohl’s. Including retail analyst David Spear who warned that under that model Kohl’s would most likely suffer the same fate as Toys R Us. “If, in fact, Franchise Group plans to implement some type of ‘franchise’ model on Kohl’s, and burden the deal with significant debt, then the probability of another retail disaster occurring is quite high,” warned Spear. 

Thankfully though, Kohl’s has seen the err in its ways and will live to fight another day, at least for now. Kohl’s Chairman Peter Boneparth announced that the deal with Franchise Group would not be moving forward. He cited concerns with an unstable retail market and risky financing options, amid a period of uncharacteristically high inflation. “Given the environment and market volatility, the board determined that it simply was not prudent to continue pursuing a deal,” Boneparth said via The Wall Street Journal

Boneparth said that going forward, for the time being, Kohl’s has decided to navigate the pitfalls of the current market and the holes in their business themselves. In a time defined by such uncertainty, this is an intelligent move. Kohl’s knows the interworkings of its business and its consumer base much better than Franchise Group. The market volatility at present necessitates that kind of deep understanding. Franchise Group would not have had the time that it needed even to begin to understand the full scope of what if would have needed to get Kohl’s through such a tumultuous period. An acquisition would have been the equivalent of a ticking time bomb. 

Ultimately, Kohl’s decision to hold onto its business, for the time being, is likely the best chance it has at surviving in the long term. Nicola Kinsella, who works as the SVP of global marketing at Fluent Commerce, believes that this is exactly the move they should have made if they had any intentions of sticking around. “Kohl’s should continue to innovate with new partnerships and offerings and wait for a more strategic, value based, offer that will help them drive long term growth,” said Kinsella. She went on to explain if they are able to increase profits by a small amount it would put them in a much better place to attract more qualified buyers that are well-equipped to continue to drive Kohl’s in the right direction. The ball is in Kohl’s court now, what happens next will be up to them.