Kohl’s Faces Turmoil: CEO Fired After Just Four Months Amidst Declining Performance

Kohl’s Corporation, a major player in the retail landscape and one of Wisconsin’s largest companies, is currently navigating a turbulent period marked by leadership upheaval and declining financial performance. The company recently announced the termination of its Chief Executive Officer, Ashley Buchanan, after a mere four months in the role, sending shockwaves through the corporate world and raising questions about the future direction of the department store chain.

The abrupt dismissal of Buchanan stems from alleged violations of company policies involving undisclosed conflicts of interest related to vendor transactions. According to Kohl’s official statement released on May 1st, Buchanan directed the company to engage in vendor dealings that presented these conflicts. The company was quick to emphasize that the termination was not related to Kohl’s overall performance, financial reporting, or results of operations, and that no other company personnel were involved.

The departure of Buchanan leaves a significant void at the helm of Kohl’s, particularly given his substantial compensation package, estimated to be worth over $20 million, encompassing base salary and stock options. This lucrative compensation placed him among the highest-paid executives in Wisconsin, notably exceeding that of his predecessor, Tom Kingsbury. The substantial investment in Buchanan’s leadership underscores the company’s initial optimism regarding his ability to steer Kohl’s towards renewed growth and success.

In the interim, Michael Bender, the Chairman of Kohl’s Board of Directors, has been appointed as interim CEO while the company undertakes a comprehensive search for a permanent replacement. Bender’s extensive experience in the retail sector, including his previous role as President and CEO of optical retailer Eyemart Express from 2018 to 2022, positions him as a capable steward during this transitional period. Prior to his tenure at Eyemart Express, Bender held executive positions at Walmart Inc., further solidifying his expertise in the industry. He has been a member of the Kohl’s board since 2019 and assumed the role of board chair in May 2024. While serving as interim CEO, Bender will remain on the board but will step down from certain board committees. The company has indicated that a new board chair will be announced in due course.

The leadership change at Kohl’s comes at a critical juncture for the company. The retailer is grappling with a confluence of challenges, including declining sales, store closures, and a significant drop in its stock price. In a recent financial report released on March 11th, Kohl’s revealed a concerning 9.4% sales decline and a staggering 74.2% profit decline during the pivotal fourth quarter of 2024, which encompasses the crucial holiday shopping season. These figures underscore the mounting pressure on Kohl’s to revitalize its business strategy and regain its competitive edge.

Ashley Buchanan assumed the role of CEO on January 15th, inheriting a company facing significant headwinds. His brief tenure marks the third leadership change at Kohl’s within a four-year span, highlighting the instability at the top and the urgency for a long-term, sustainable strategy. Before joining Kohl’s, Buchanan served as the leader of crafts retailer Michael’s Co. for four years, during which he orchestrated a deal to sell the company to private equity investors. His experience in navigating complex business transactions and driving strategic change was likely a key factor in his initial appointment as Kohl’s CEO.

The selection of Michael Bender as interim CEO reflects the board’s confidence in his ability to provide stability and direction during this period of uncertainty. John Schlifske, chair of the boards Nominating and ESG Committee, stated, "The Board has full confidence in Michael to serve our customers and associates as Interim CEO and deliver on our commitments to our shareholders." Bender’s experience at both Eyemart Express and Walmart, along with his deep understanding of Kohl’s operations as a board member since 2019, make him a logical choice to lead the company through this transition.

The challenges facing Kohl’s are multifaceted and require a comprehensive approach. The decline in sales and profitability suggests a need to re-evaluate the company’s merchandising strategy, enhance its online presence, and adapt to evolving consumer preferences. Store closures reflect the broader trend of brick-and-mortar retailers grappling with increased competition from e-commerce giants and changing shopping habits. The drop in stock price indicates a lack of investor confidence in the company’s future prospects.

To address these challenges, Kohl’s will need to focus on several key areas. First, the company must invest in enhancing its online shopping experience to meet the growing demand for e-commerce. This includes improving website functionality, expanding product offerings, and streamlining the shipping and delivery process. Second, Kohl’s should explore innovative ways to attract younger consumers and build brand loyalty. This could involve partnering with popular influencers, launching exclusive collaborations, and leveraging social media platforms to engage with target audiences. Third, the company must carefully evaluate its store footprint and make strategic decisions about store closures and renovations. This may involve closing underperforming stores and investing in upgrading existing locations to create a more modern and engaging shopping environment. Fourth, Kohl’s should continue to focus on its loyalty program and explore ways to enhance its value proposition for customers. This could involve offering more personalized rewards, exclusive discounts, and early access to sales events.

The situation at Kohl’s is being closely watched by industry analysts and investors alike. The company’s ability to navigate this period of turmoil and regain its footing in the competitive retail landscape will depend on its ability to effectively address the challenges it faces and implement a successful turnaround strategy. The appointment of a permanent CEO will be a crucial step in this process, and the company will need to carefully consider the qualifications and experience of potential candidates to ensure that they have the vision and leadership skills necessary to guide Kohl’s towards a brighter future. The company’s ranking as 235th on the 2024 Fortune 500, with roughly 4,000 Milwaukee-area corporate employees and thousands of other workers around the state, underscores its significant presence in the Wisconsin economy and the importance of its long-term success.