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Kohl’s stock soars on reports that Sycamore is exploring takeover

Yahoo Finance's Brad Smith and Akiko Fujita discuss how Kohl's stock is responding to reports that private equity firm Sycamore is exploring a takeover of the retailer.

Video transcript

AKIKO FUJITA: Let's talk about another company that is also seeing some gains in the session, and this is a big one. Kohl's up more than 30% here on those reports that Sycamore is considering an acquisition at $65 a share. So a slight premium there, Brad, on where the share is trading-- when shares are trading today.

BRAD SMITH: Yeah, and, you know, just looking through some of the historical elements for Kohl's and how they have performed-- of course for Kohl's, what they had come out and said in their most recent earnings, they had seen record Q3 earnings. They raised their full-year outlook. They also had an all-time-high EPS for the company. Q3 sales increased 16% compared to the previous year. And so all of these things considered with the strategy that they've got-- some of those partnerships with Sephora, bringing 200 of them into stores. It's at a time where they're revving up both in the categories that they bring customers into stores for but also the types of partnerships that are going to position them for continuing to have foot traffic.

The question for me is when you do have this type of activist measure, is it looking at the square footage of these locations? Because we do know that it is a high-square-footage environment that they do operate. And the larger question for many retailers is how can they mitigate the amount of square footage that they have to operate and the type of overhead that is going out the door to reduce some of those expenses.

And perhaps even at a time of transformation, that is paying off for Kohl's right now, as noted in their most recent earnings report. I think that's what some of these activist investors may also be looking at going forward. How do you kind of trim some of the operational expenses that a company like Kohl's has to really account for too?

AKIKO FUJITA: Yeah, certainly a pretty big brick-and-mortar presence there as well.

I'd be curious. You know, we're talking about two, three companies today, but how much of this talk-- acquisition talk is going to accelerate as we see this kind of pullback here?

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