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In accordance with an activist group of buyers, Kohl's retail earnings are pushing for "Better of Worst" and calling for change

Customers leave a Kohl & # 39; s store on November 12, 2015 in San Rafael, California.

Justin Sullivan | Getty Images News | Getty Images

A group of activists seeking control of Kohl's board of directors posted a letter Friday saying the retailer's latest quarterly results were flawed and underscored the need for a revised strategy.

"The board seems to be satisfied and only marginally better than the worst companies in the retail sector," said the group in the letter to the Kohl shareholders. "'Best of the Worst' is neither a viable strategy nor does it satisfy shareholders like us who strive for long-term superior performance."

"Kohl's is tremendously well positioned with off-mall locations, which has significant advantages, but it also means Kohl's against thriving off-mall players like TJX Companies, Ross Stores, Target, Old Navy and Burlington competes, "he added.

The group of investors – Macellum Advisors, Ancora Holdings, Legion Partners Asset Management and 4010 Capital – has a 9.5% stake in Kohl & # 39; s.

In late February, Kohls turned down an attempt to take control of his board, arguing that doing so would disrupt the momentum in reshaping his business.

When Kohl & # 39; s reported fourth quarter earnings earlier in the week, he beat Wall Street estimates and pointed to stronger growth in 2021 as his sales growth initiatives (like partnering with Makeup Retailer Sephora) is expected to take hold. Kohl & # 39; s also announced that it would reinstate the dividend and buy back shares.

Additionally, some new details were cited to allay activists' frustrations, including the fact that Kohl & # 39; s gained more than 2 million new customers in 2020 thanks to its Amazon returns service.

However, activists said Friday that they remain skeptical that Kohl's Amazon return program is adding to the revenue.

A Kohl & # 39; s spokeswoman told CNBC in an email that activists' comparisons of 2019 financial results with expectations for 2021 were "nonsensical in the face of an ongoing global pandemic."

"The activists' comments and track record show that they are focused on short-term payouts at the cost of sustainable success," she said. "We reject the short-term nature of the activists and their attempt to disrupt our dynamism at this critical time. We remain open and interested in new ideas that can help us add value to our company and our shareholders."

Kohl's shares fell about 2% on Friday lunchtime. The stock is up about 50% over the past 12 months. Kohl's has a market cap of $ 8.64 billion, which is larger than Nordstrom and Macy's.

Read the activists' full letter here.

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