Kelso, the activist investor seeking a board seat at discount retailer The Works (WRKS), has sharply rejected the company’s claims that its proposed director appointment would damage shareholder value.
Kelso wants retired private equity partner Graeme Coulthard installed as a director at the AIM-listed retailer, but The Works has urged shareholders to block the move.
John Goold, chief executive of the FTSE 250 investment firm, said: “Kelso believes that Graeme Coulthard would be a great addition to the board of The Works and we are disappointed by the board’s reaction.”
The Works, the high street retailer selling toys, arts and crafts, warned that Coulthard’s appointment could “create unnecessary distraction [and] risk derailing” the board’s existing growth strategy.
The retailer also questioned Coulthard’s suitability, arguing he “has limited experience as a director of a listed company and no executive experience in multi-site value retail operations.”
The Works told Kelso directly that the move would “not be in the best interests of the company or its stakeholders and would be more likely to undermine, rather than enhance, long-term value creation.”
Despite the pushback, Kelso has refused to withdraw its request and is demanding shareholders vote to appoint Coulthard at the company’s annual general meeting next month.
Goold dismissed the retailer’s characterisation of Coulthard’s background as inaccurate, pointing to his board tenure at Card Factory between 2010 and 2015, where he worked alongside private equity firm Charterhouse Capital Partners.
“We think it is misleading of the board to suggest to shareholders that Graeme has no direct relevant experience in value multi-site retailing given his significant experience as a director of the Card Factory between 2010 and 2015 where he helped create very significant value for the owner Charterhouse Capital Partners,” Goold said.
He added: “The idea of the claim by the board that Graeme Coulthard will undermine value creation rather than enhance it is also absurd in our view.”
Coulthard, who personally owns eight per cent of The Works, served as a partner at London-based private equity firm Charterhouse for 19 years before retiring in 2017.
This is not Kelso’s first attempt to exert influence over the retailer, having previously secured board representation through Goold and finance chief Mark Kirkland in 2024.
The pair reportedly pushed for the removal of The Works’ then-chair and helped orchestrate the appointment of her successor, Stephen Bellamy, before quitting the board in October 2024.
Kelso currently holds a 10 per cent stake in The Works, making it the retailer’s third-largest shareholder, and previously described the company as “one of the most undervalued companies on the UK stock market.”
The Works’ shares fell more than five per cent on Thursday, dropping to 88p, following the company’s public statement against Kelso’s board ambitions.
Under chief executive Gavin Peck, the retailer has been repositioning itself away from its discount image, focusing on screen-free entertainment for children to attract British parents.
Kelso is understood to be supportive of Peck’s leadership and strategic direction, despite its public dispute with the broader board.
The Works reported 3.3 per cent sales growth and £260m in revenue in the year to May, with adjusted profit rising 44 per cent to £7.2m, suggesting the retailer’s turnaround is gaining traction.