Kohl’s has rejected a move by an investor group to shake up its board with nine new directors, setting the stage for a possible proxy fight.

The investor group, which holds a 9.5% stake in the retailer, has been in discussions with Kohl’s since early December. On Monday, it announced it had nominated nine “highly-qualified independent candidates” for election to the board at the 2021 annual meeting of shareholders.

“The board has failed to help develop and oversee a strategic plan to respond to a rapidly-changing retail landscape,” the group said in a letter to shareholders.

News of the group’s interest drove Kohl’s shares up 6.2% to $55.97 in trading Monday. But the company said it was already pursuing several of the initiatives proposed by the activists and had determined that others wouldn’t add value.

“We reject the investor group’s attempt to seize control of our board and disrupt our momentum, especially considering that we are well underway in implementing a strong growth strategy and accelerating our performance,” Kohl’s said in a news release.

The group includes Macellum Advisors GP, Ancora Holdings, and Legion Partners Asset Management.

“It’s kind of shocking to us that they are not more willing to embrace our option … our offer to help. We really want to fix this business,” Macellum Chief Executive Jonathan Duskin told CNBC.

As CNBC reports, Kohl’s “was facing headwinds even before the COVID pandemic, as the retailer ceded customers to online players like Amazon, and big-box companies like Target and Walmart.” Amid the pandemic, total revenue fell 25% to $9.8 billion in the nine months ended Oct. 31, while its losses totaled $506 million, compared with a profit of $426 million one year prior.

CEO Michelle Gass has embraced new initiatives such as accepting returns of items that Amazon shoppers bought on the e-commerce giant’s website.

But the investors want Kohl’s to add directors with deep retail experience, cut executive compensation, slash inventory levels, and consider selling some of its non-core real estate. They estimate the real estate assets could yield between $7 billion and $8 billion.

Kohl’s

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