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Kohl’s calls off sales talks with Franchise Group, stock plummets

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Yahoo Finance anchors Brian Sozzi, Julie Hyman, and Brad Smith discuss news that retailer Kohl's terminated sales talks with Franchise Group and why they think it's the right move.

Video Transcript

- Shares of Kohl's are getting blasted after the retailer terminated talks to sell its business to Franchise Group. Kohl's board member Pete Boneparth stating that the current financing and retail environment created significant obstacles to reaching an acceptable and fully executable deal agreement. Wow. We've been very critical of Kohl's merely for the past two years. Highly critical of how this board has shopped this company.

This is a disaster. Just a complete failure of leadership by the executive team and the board members of Kohl's. They had a chance to sell Kohl's at about a five-year high in terms of stock price in early March. Since then, they have come out here, issued a warning a couple of weeks ago after that first quarter. They've come out here today issuing another sales warning for the second quarter.

The board, the executive team have just destroyed massive amounts of shareholder value. And now you have to think about, well, what's next? So here's a disappointing likely back to school shopping season for Kohl's. Here's a potentially disappointing holiday season. And you have to wonder, does this stock price continue to stay under pressure?

- When you say we've been highly critical, is that the royal we?

- Well it's [INTERPOSING VOICES]

- I know you've been critical. I mean, with reason, right?

- On the board level, when you are a board member, you have a job. It's to just maximize, I think, shareholder value. And they have not done this. They have done seemingly everything not to sell this company and keep their big fat checks rolling in. They have done a terrible job. And after the second quarter is reported, at what point are you starting to look at potential management changes at Kohl's? Somebody has to pay for making decisions like this.

- Look, they said that they engaged with more than 25 parties. "Exhaustive" quote, unquote, process. But this is a process that started out at least with the Franchise Group on June 6. So prior to that, anybody who was even kicking the tires on Kohl's, what are you really getting? You're getting massive overhead with regard to all of the either leases or owned properties that they have.

And then you're also getting inventory, which by the way, a lot of the manufacturers that were working with Kohl's, the ones that have decided to go direct to consumer, they're starting to cut those ties. So what inventory besides the Sephora partnership are you actually getting in those stores that's going to continue to bring customers in who are not just dropping off their Amazon returns?

- And maybe I've been too negative. At least Kohl's is not Bed Bath & Beyond. I guess that's the positive spin for today.