Third Kohl’s CEO in 4 years hired after slow sales, revamped stores

On November 27, 2024By Littum

In January, Kohl’s Corp. on his third CEO in four years, with Ashley Buchanan in the top executive position.

Kohl’s has struggled with declining sales for years, and executives have yet to find a way to reverse the trend.

The timing of the announcement of a new CEO surprised many in the retail world.

Current CEO Tom Kingsbury, who announced on Monday that he is stepping down from the company, said during a call with analysts and investors that he only intended to be with the company for a short time when he became a full-time CEO in February 2023.

“I came in to help the company transition,” Kingsbury said. “It’s not an exact science in terms of hiring someone. We were fortunate that Ashley came in and decided to join us, and that’s how the timing worked out.”

Here’s how Kohl’s made it to a rotating group of CEOs:

Buchanan will lead Kohl’s and will receive a $3.75 million signing bonus

Buchanan has been in the running for the position for a while.

“Ashley is very much in line with the strategy we have in place right now,” Kingsbury said. “He’s spent a lot of time with our board, time with me.”

In addition to Kohl’s $1.475 million salary, Buchanan will also receive a $3.75 million signing bonus from the company payable within 30 days of his January start date.

Kingsbury said there will be changes as Buchanan wants to “put his fingerprints on the strategy” but believes he will leave the company in a good position.

“The team is in a good place and we have significant guardrails in terms of making sure there aren’t any major issues, but that’s how the timing came,” Kingsbury said. “We just felt it was best to do it now.”

Kohl’s Chairman Michel Bender said the company had a “time-based agreement” with Kingsbury and strong CEOs are “hard to find.”

“When we were able to attract Ashley to the company and identify him as the ideal candidate, with a mid-January availability date, it made sense for us,” said Bender.

The current strategy has the board’s faith, Bender said, and Buchanan could boost the company’s growth.

“He knows the customers. He follows the data. And he follows what the customers want and then brings solutions to them,” Bender said. “Ashley is a grocer, so he knows the product. He has deep digital chops and has demonstrated expertise in how to integrate digital into physical environments, which is an important part of Kohl’s business.”

Bender said Buchanan “already has a number of requests for information about the company” and has visited stores and ordered products online.

Prior to joining Kohl’s, Buchanan led The Michaels Companies as CEO since 2020. In 2021, he helped close a deal with Apollo Global Management for $3.3 billion to take the company private.

“We are excited to enter this new chapter with Apollo, who shares our strategic vision for Michaels as an omnichannel retailer that offers a one-stop shop experience for the entire Michaels community,” Buchanan said in a declaration. the agreement. “As a private company, we will have the financial flexibility to invest in, expand and improve our retail and digital platforms.”

Investor battles lead to Kingsbury promotion

In 2021, Kohl’s was in a heated battle with activist investor Macellum Capital Management and others over the management of the company.

Gass, who started as CEO of the company in 2018, and the board negotiated to expand the company’s board and allow the activist investors to put two new members on the board to avert a showdown with shareholders.

Kingsbury was one of the board members.

In 2022, Gass, Kohl’s and Macellum were back at it in the closest thing to a rock battle on Wall Street. In this case, Macellum nominated their own board of investors, but the shareholders supported the company’s list of candidates.

Then in November, Kohl’s announced that Gass would step down to lead Levi Strauss Co.

Kingsbury was then named interim CEO until he was promoted to full-time CEO the following February.

As part of the deal Macellum and Kohl’s entered into a cooperation agreementwhich is essentially a corporate truce.

According to the agreement, the standstill period lasts until “the 18-month anniversary of the date on which Mr. Kingsbury ceases to be a CEO.”

Which means Buchanan has a quiet period until September 2026, when Macellum, if it decides to do so, can challenge the company again.

The Kingsbury era: cut inventory, push gifts

With Kingsbury at the helm of Kohl’s, his first major initiative was to curtail its inventory.

Kingsbury said the company was “out of control by 2022” when it came to buying merchandise and it needed more discipline.

Kingsbury also got the company to invest more in gifts and impulse buys.

Two years later, Kingsbury now says those investments are hurting the company’s private label sales.

He made some noticeable changes in the store layouts. He brought back fine jewelry that was taken out to support the Sephora expansion.

He also moved the children’s and dress departments to the front of the store to drive traffic.

Kingsbury also made a deal with Babies ‘R’ Us, adding 200 of its locations to Kohl’s stores.

Employees ordered back to the office

One of the biggest changes Kingsbury made was ordering workers to return to work four days a week.

Despite these changes, Kingsbury was unable to pull Kohl’s out of its sales slump.

In May, the company expected sales to fall 2-4% for the year, then in August it updated its forecast that sales would fall 4-6% for the year, and on Tuesday it made another update, saying it expects sales to be down 7-8% for the year.

The day after the company announced that Kingsbury would step down as CEO, Kohl’s reported sales fell 8.8% in the quarter, and comparable sales fell 9.3% from last year.

Kingsbury told analysts and investors that the company believes the changes it has made in recent years “will make us more competitive over the long term.”

“However, we underestimated the short-term impact this change could have on our sales performance,” Kingsbury said. “We are not satisfied with our performance and are taking aggressive steps to reverse the sales decline. We must execute at a higher level and ensure that we put the customer first in everything we do.”