Wednesday morning, shareholders of Kohl's department stores are meeting and could get behind board of directors nominees backed by the huge Menomonee Falls-based retailer. Or the shareholders could choose nominees supported by activist investors.
It could be a major crossroads for Kohl's and its 4,000 local employees, as the firm also considers various buyout offers announced in recent weeks.
This battle is occurring 60 years after the first Kohl's department store opened in Brookfield.
According to the Maxwell Kohl Archives, the Polish immigrant and successful Milwaukee grocer had a dissatisfying experience buying a shirt. So in 1962, Max Kohl, father of eventual Wisconsin Sen. Herb Kohl, decided to open a department store. Former Kohl's executive Jeff Rusinow, who wrote a book about the company's history, titled The Rise and Stall of Kohl's Department Stores, says early growth was gradual.
"It was only a couple stores at the time. For the next 10 years, they slowly grew the business. In 1972, the Kohl family sold their department store group," Rusinow tells WUWM.
#Immigrants like @Kohls founder Maxwell Kohl come with entrepreneurial spirits that endure: pic.twitter.com/C2DROJt27l via @FWD_us
— The Immigrant Learning Center (@ilctr) September 12, 2014
LISTEN: Former Kohl's executive looks at history, potential future of major retailer
After about 15 years of out-of-state ownership, the Kohl's chain has been locally run for more than three decades. And there are now more than 1,100 stores across the U.S.
But the first Kohl's department store at Elmbrook Plaza in Brookfield is still there.
Standing in the parking lot, shopper Dale Brown says he likes to go to Kohl's for sporting goods and shoes. "Good place to shop. Yeah, I think it's a good place to shop. Variety, price, the quality's good too," he says.
Another shopper, Judy Migel, says she goes to Kohl's for some basics. "They're not really fashion forward in a lot of respects. But they have reasonable prices, and for basic items, that's generally why I shop at Kohl's," she says.
By not being fashion-forward, Migel says she means she doesn't find Kohl's competitive on trendy clothing.
The company says it has been working to update its image, expanding its online offerings, and in-store partnerships with Sephora cosmetics, while trying to keep with Kohl's long tradition of holding down costs, with their locations mostly in the suburbs.
But change hasn't come fast enough for the activist investment firm Macellum Advisors, which contends Kohl's has been underperforming and wants more of its candidates elected to Kohl's board.
Kalin Kolev teaches management at Marquette University. He says Macellum owns about 5% of Kohl's outstanding common stock and the push Macellum is making is interesting, to say the least.
"They're owners, or part-owners of the company. So, they have the right to request changes, to question management, to always want the higher stock price, higher dividends. It's never certainty whether shareholders are right or managers are right," he says.
Kolev says the changes in merchandise Kohl's has been making are noticeable. "All of this is targeting the younger consumers because those are the people that are more interested in the Sephora brand. Also, those are the people that are comfortable and much more open to online business and online orders," he says.
But more clout for Macellum could mean even bigger changes, as it's believed that firm wants Kohl's board to sell the department store chain.
Wisconsin Sen. Tammy Baldwin (D) recently urged Kohl's to reject any bids threatening jobs in Wisconsin. About 4,000 people work for Kohl's in the Milwaukee area, and about that many are employed elsewhere in the state.
Kolev says buyouts often mean changes in the workforce. "If we look collectively at what mergers and acquisitions do, one of the main objectives is to streamline the business, reducing cost. So the combined company is more efficient. One of the first areas you try to streamline is to reduce headcount and personnel," he says.
But will that happen with Kohl's? Kolev says there've been no details about takeover offers, and even if details surface, Kohl's could take steps to require that employees be protected, at least for a while.
The next chapter for the stores Max Kohl founded because he thought he could do a better job selling shirts, begins at Wednesday's Kohl's shareholders meeting.
