Kohl’s is the latest retailer to be feeling the heat from an activist investor looking to spin off its e-commerce operations from the rest of its business.

The chain has been urged to consider selling and leasing back its real estate assets by Engine Capital in an effort to unlock shareholder value in the near future, according to a Wall Street Journal report.

The hedge fund maintains that Kohl’s share price has consistently underperformed its retailer peers and the market in recent years and is in need of a shakeup. Engine maintains that Kohl’s online business would be worth $12.4 billion as a separate entity and that buyers would pay at least $75 a share to acquire the retailer’s real estate.

Kohl’s similarly faced pressure earlier in the year from an activist investor group made up of Macellum Advisors GP, Ancora Holdings, Legion Partners Asset Management and 4010 Capital. The activist investors sought to force major changes to the retailer’s board of directors and areas of operation including its merchandising assortment. The group said in February that Kohl’s assortment “resulted in too many choices, too much overlap and little differentiation between the ‘good, better, best’ price schemes.”

Kohl’s found a compromise with the group when it announced in April that it was adding three new directors to the retailer’s board. The investors initially sought to replace nine of 12 Kohl’s board members.

The push for Kohl’s to split up its digital and physical operations goes against common wisdom that argues for delivering seamless commerce as demanded by consumers. Proponents of the approach posited by Engine Capital argue that consumers see little difference from the split and that doing so opens up a multitude of corporate partnership opportunities that wouldn’t take place otherwise.

Kohl’s rival Macy’s is facing similar pressure. The department store retailer announced last month that it had retained the consulting firm Alix Partners to evaluate separating its online business. The retailer did so in the face of pressure from Jana Partners, an activist investor, which in October delivered a letter to Macy’s board demanding that the company “de-omnify.”

Hudson’s Bay Company, which split its Saks Fifth Avenue stores and Saks.com into separate companies in March, has maintained that consumers’ experience with its brands have not been altered as a result of the change.



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