Kohl’s CEO Tom Kingsbury is “not satisfied” with where the company financially stands heading into the holiday season—a time that historically gives retailers a monetary cushion going into the new year. However, the company has failed to come up for air due to diluted net sales year after year. In a press release, Kingsbury said the company’s third-quarter fiscal results “did not meet our expectations” and “sales remained soft.” Now, Kohl’s is “taking aggressive action” to hopefully get sales back on track.
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According to Kohl’s third-quarter fiscal results, the company’s net sales decreased 8.8 percent year-over-year, and comparable (same-store) sales saw a 9.3 percent drop. Net income for 2024 stands at $61 million, compared to $131 million for 2023.
“We must execute at a higher level and ensure we are putting the customer first in everything we do," Kingsbury said in the release. “We are approaching our financial outlook for the year more conservatively given the third quarter underperformance and our expectation for a highly competitive holiday season.”
Higher interest rates, inflation, and poor business decisions have largely provoked Kohl’s financial downfall. For starters, the retailer scaled back its petite apparel in 2022, which proved to be a “short-sighted decision,” Kingsbury admitted during a Nov. 26 earnings call.
And while customers were amped up about Kohl’s $500 million partnership with Sephora, the collaboration meant exiling Kohl’s long-standing fine jewelry section. With Black Friday and the holidays quickly approaching, the retailer is now working overtime to usher in those displays again. During the earnings call, Kingsbury said that the fine jewelry counters are being reintroduced at 200 Kohl's stores this holiday season.
Under Kingsbury’s leadership, Kohl’s also made a big investment in brand names, fracturing its relationship with private labels. This also didn’t bode well for the company’s wallet.
“We simply did not have enough private brands inventory given our investments in market brands and our key growth categories,” Kingsbury said on the call. “I want to be clear, though: We continue to believe our market-brand strategy and investments into the key growth categories are the right long-term strategic moves. We simply must do a better job of balancing these initiatives while managing the core business.”
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While Kingsbury has taken much of the heat, it won’t be his mess for much longer. In a Nov. 25 release, the company announced that Kingsbury will be stepping down as CEO effective Jan. 15, 2025, four months before his original contract was set to expire.
He will be replaced by Ashley Buchanan, the current CEO of The Michaels Companies and former senior executive at Sam’s Club and Walmart.
Many economists find Kingsbury’s retirement timing suspicious. In a New York Postinterview, Evercore ISI analyst Michael Binetti said it “casts a meaningful shadow” on the company's health, especially amid one of the busiest times of the year for retailers.
“While we heard from many retailers last week about quarter to date accelerations, we don’t think an abrupt CEO departure is a strong sign of confidence the night before earnings and four days before Black Friday,” he told the outlet.
Meanwhile, Fitch Ratings senior director David Silverman told Retail Dive it will be up to Buchanan “to assess the company’s potential operating trajectory” and implement new “strategic shifts” that pull Kohl’s out of the red zone.
In the press release, Buchanan said he hopes to help Kohl's “evolve” while keeping “our brand and loyal customer base” at the heart of the matter. In 2025, he hopes to create “a compelling retail experience for the future.”
