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Kohl's Corp.


The law firm of Kirby McInerney LLP announces that a class action lawsuit has been filed in the U.S. District Court for the Eastern District of Wisconsin on behalf of those who acquired Kohls Corporation (“Kohls”) (NYSE: KSS) securities between October 20, 2020 through May 19, 2022, both dates inclusive (the “Class Period”). Investors have until November 1, 2022 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
 
Kohls offers branded apparel, footwear, accessories, beauty, and home products through its stores and website.
 
In October 2020, Kohl’s announced that it had entered into a new strategic framework to “drive top-line growth,” “expand operating margin,” and become “the most trusted retailer of choice for the active and casual lifestyle” (the “Strategic Plan”). Specifically, the Strategic Plan featured “new initiatives to position the company for long-term success,” including “be[ing] the destination for active, casual and beauty for the entire family from the most trusted brands, always delivering quality and discovery,” “lead[ing] with loyalty and value through a best- in-class rewards program,” and “offer[ing] a differentiated omnichannel experience that is easy and inviting, no matter how customers want to shop.” In addition, Kohl’s announced that the Company was “focused on increasing profitability with a goal of expanding its operating margin to 7% to 8%.” In announcing the Strategic Plan, the Company touted its purportedly strong foundation of customers, industry-leading loyalty and charge card programs, high volume of stores, and large and growing digital business.
 
On May 19, 2022, Kohl’s issued a press release announcing the Company’s fiscal Q1 2022 results, reporting, among other items, a net sales figure expected to grow up to only 1% (compared to Wall Street consensus growth of 1.94%), earnings per share of $0.11 (missing estimates by $0.59), a revenue figure which only barely edged expectations, and the Company’s decision to cut its full year earnings forecast. These results were at odds with the Defendants’ representations regarding the successful execution of the Company’s Strategic Plan, which was purportedly poised to drive top-line growth and position the Company for long-term success. Further, the press release quoted Kohl’s Chief Executive Officer (“CEO”) Defendant Michelle Gass (“Gass”), who stated, in relevant part, “[t]he year has started out below our expectations. Following a strong start to the quarter with positive low-single digits comps through late March, sales considerably weakened in April as we encountered macro headwinds related to lapping last year’s stimulus and an inflationary consumer environment.”
 
On May 20, 2022, Macellum Advisors GP, LLC (“Macellum”), “a long-term holder of nearly 5% of the outstanding common shares of Kohl’s”, issued a statement addressing “[t]his quarter’s extremely disappointing results,” which Macellum attributed to a “flawed strategic plan and an inability to execute.” Macellum also stated that “the current Board appears to have withheld material information from shareholders about the state of Kohl’s in the lead-up to this year’s pivotal annual meeting,” which “suggests to us a clear breach of fiduciary duty.” On this news, Kohl shares price declined by $5.84 per share, or approximately 12.97%, from $45.04 to close at $39.20 per share on May 20, 2022.
 
The lawsuit alleges that, throughout the Class Period, Defendants made false and/or misleading and/or failed to disclose that: (i) Kohl’s Strategic Plan was not well tailored to achieving the Company’s stated goals; (ii) the Defendants had likewise overstated the Company’s success in executing its Strategic Plan; (iii) Kohl’s had deficient disclosure controls and procedures, internal control over financial reporting, and corporate governance mechanisms; (iv) as a result, the Company’s Board was able to and did withhold material information from shareholders about the state of Kohl’s in the lead-up to the Company’s annual meeting; (v) all the foregoing, once revealed, was likely to have a material negative impact on Kohl’s financial condition and reputation; and (vi) as a result, the Company’s public statements were materially false and misleading at all relevant times.
 

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