People walk near the entrance to a Cole store on June 7, 2022 in Doral, Florida. Kohl’s has announced that it has entered into exclusive negotiations with Franchise Group, which is proposing to buy the retailer for $60 per share.

Joe Riddell | Getty Images

Retail holding company Franchise Group weighs reducing its bid for Kohl’s to nearly $50 a share from about $60, according to a person familiar with the deal talks.

Kohl’s shares fell more than 8% Wednesday afternoon to about $39 a share. They traded as low as $34.64 in late May.

The franchise group, owner of The Vitamin Shoppe and other retailers, is actively studying whether buying Kohl’s is the best use case for Franchise Group’s capital, said the person, who requested anonymity because the transfers are private and ongoing. The person said the company is increasingly concerned that the environment for some retailers could turn bleaker from here, especially if the United States were to enter a recession.

The person added that the franchise group had lined up in financing with the lenders. But the company, run by CEO Brian Kahn, weighs less now as retailers in general grapple with bloated inventory and rising prices.

The Big-box Target retailer said earlier this month that it will take a short-term hit to profits as it cancels orders and flags unwanted merchandise ahead of busy back-to-school and holiday shopping seasons. Analysts predict that many retailers will take a similar hit, and it may be an even bigger blow to those who haven’t managed to get products off the shelves.

Earlier this month, the Franchise Group proposed a $60-per-share offer to acquire Kohl’s at a valuation of about $8 billion. The two companies then entered an exclusive three-week window during which any due diligence measures and final financing arrangements could be confirmed. Expires this weekend.

The department store chain outside of malls was for the first time urged to consider a sale or other alternative to increase its share price in early December 2021 by hedge fund Engine Capital of New York. At the time, Kohl’s shares were trading around $48.45.

Then, in mid-January, activist hedge fund Macellum Advisors pressured Kohl’s to consider selling. Macellum’s CEO, Jonathan Doskin, argued that CEOs were “fundamentally mismanaging the business.” He also said Kohl has a lot of potential left to open her real estate.

Earlier this year, Kohl’s received an offer of $64 per share from Starboard-backed Acacia Research, but deemed the offer too low.

In mid-May, Kohl’s reported that its sales for the three months ended April 30 fell to $3.72 billion from $3.89 billion in 2021.

The retailer lowered its full fiscal year earnings and revenue forecasts, which also tarnished the image of a potential deal.

Representatives for Kohl’s and the Franchise Group did not immediately respond to CNBC’s requests for comment.