For the past two years, Kohl’s has been embroiled in proxy fights with the hedge fund Macellum Advisors. Macellum proposed an alternate slate of directors before the 2022 Annual Meeting, and encouraged the company to sell itself to the highest bidder in February. 

While it’s odd to celebrate the absence of change, in this case, the collapse of the Kohl’s sales process is great news for Kohl’s 100,000 workers and the communities that rely on its 1,100 stores. 

As private equity bidders started to circle the largest department store in the U.S., tragic stories from past retail bankruptcies loomed large. S&P Global Ratings was skeptical enough of Franchise Group’s plan to sell Kohl’s real estate to finance the deal and then lease back the stores that it warned Kohl’s bond rating could take a significant hit if the plan went through. That sale-leaseback playbook is precisely what decimated Sears and bankrupted Art Van Furniture.

Other potential bidders included the private equity firms Sycamore Partners and Leonard Green & Partners, which have a long history of bankruptcies. Sycamore Partners owned Belk, Nine West, and Aeropostale as they fell into bankruptcy while Leonard Green & Partners did the same with Sports Authority and J. Crew. 

While much of the reporting since the Franchise Group deal collapsed has focused on “What Went Wrong with Kohl’s,” none of the potential suitors were a good fit for the workers who make Kohl’s profits and the communities that rely on its stores. Shareholders, like Macellum Advisors, would have made a tidy profit on the sale, but the leveraged buyout would have left fewer assets to invest in operations and weather the current economic storm. Workers and communities can finally breathe a sigh of relief after months of deeply concerning reports about an imminent sale.  

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“This was developed in coordination with the Private Equity Stakeholder Project (PESP). PESP is a nonprofit with a mission to identify, engage, and connect stakeholders affected by private equity with the goal of engaging investors and empowering communities, working families, and others impacted by private equity investments. www.pestakeholder.org“