UPDATE 2-Kohl's rejects activist investors' bid for board control

(Adds new Kohl’s statement; Updates shares)

Feb 22 (Reuters) - Kohl’s Corp on Monday rejected a move by an investor group to nominate nine directors to revive the business of the troubled department store chain, calling it an attempt to “seize control” of its board.

Kohl’s shares rose nearly 8% to $56.85 in afternoon trading. They lost 20% in value last year as sales in the department store chain declined further due to the COVID-19 pandemic.

The group including Macellum Advisors GP LLC, Ancora Holdings Inc, Legion Partners Asset Management LLC and 4010 Capital LLC hold a combined 9.5% stake in Kohl’s.

They are pushing the company to add directors with retail experience, reduce inventory levels and consider a sale-leaseback of some of its real estate.

Kohl’s said in a statement it was already well underway in implementing a growth strategy and improving performance. The company added that it had been in talks with the group since December but the bid to take control of its 12-member board only threatens its momentum.

Kohl’s like other U.S. department stores was struggling to boost sales even before the COVID-19 pandemic, as consumers shifted to online-centric, off-price and deeper-pocketed big-box retailers. However, it provided a better-than-expected fourth quarter outlook earlier this month.

The investors believe Kohl’s could generate more than $10 in annual earnings per share within the next few years and drive its stock price twice as high current levels.

The group’s stake and nominations were first reported by the Wall Street Journal on Sunday.

Reporting by Uday Sampath in Bengaluru; Editing by Shinjini Ganguli and Ankur Banerjee