Reuters recently reported that Kohl’s may sell up to $2 billion in a sale leaseback deal to the private equity firm Oak Street. Kohl’s executives should listen to their own advice from March – as Kohl’s fended off an activist campaign from Macellum Advisors, they said: “Macellum has presented no value-enhancing proposals. The sale leasebacks that they are demanding are an inefficient source of financing that would negatively impact margins by adding unnecessary rent expenses in perpetuity and risk Kohl’s investment-grade rating.”

When Franchise Group tried to take over Kohl’s, analysts similarly echoed concerns that a sale leaseback would hurt the company’s credit rating and financial position. If the deal goes through, it will signal tough times ahead for workers. Kohl’s will be forced to spend more money on lease payments, and the company will have less to invest in retaining its workforce at a time when it is difficult to hire.

Retail workers have seen this story before. Sale leasebacks played a pivotal role in tanking Sears and Art Van Furniture. In May, UFR encouraged Kohl’s shareholders to vote down private equity bids and then breathed a sigh of relief after the Franchise Group bid fell apart. Sale leasebacks are a classic part of the private equity playbook – they generate cash payouts in the short term while risking the future of the business and the well being of the people who rely on it. 

Kohl’s executives knew in March that sale leasebacks would hurt the company in the long term, and they know it’s still true today. This reversal and short-term thinking will not fix the company’s problems, but it will create new ones and cause a world of hurt for thousands of workers.