Kohl’s has abruptly ended the tenure of its recently appointed CEO, Ashley Buchanan, following an investigation that uncovered conflicts of interest in dealings with vendors. Michael Bender, the current Chairman, will assume the role of interim CEO immediately. With this role change, Bender will also vacate his position on several subcommittees, as noted in a regulatory document from the department store chain.
This shake-up comes just a few months after Buchanan, previously CEO of Michaels craft stores, started his role on January 15, marking him as the third CEO for Kohl’s in three years. His dismissal, as stated by Kohl’s, does not pertain to the company’s performance or financial reports and does not touch upon any involvement from other employees.
Kohl’s is now embarking on a search for a permanent CEO and will announce a new chair when appropriate. The company was not available for immediate comments, and Buchanan has yet to respond to inquiries sent to his LinkedIn profile.
The investigation, as presented in a Securities and Exchange Commission filing, was conducted by external legal advisers under the supervision of Kohl’s board’s audit committee. The findings revealed that Buchanan had pushed for business engagements with a vendor owned by an individual he had personal ties with, under conditions that were notably advantageous for the vendor. Additionally, Buchanan orchestrated a substantial consulting deal with the same individual, contravening Kohl’s ethics code by failing to disclose these personal relationships.
With his termination, Buchanan will forfeit all his equity awards from Kohl’s, including those granted upon his hiring on January 15. According to documentation, he must also return a proportionate share of his $2.5 million signing bonus. Consequently, the board decided to retract Buchanan’s nomination for its board of directors ahead of the shareholder meeting scheduled for May 14.
Tom Kingsbury, whom Buchanan succeeded, will continue advising Kohl’s and remains a board member until his retirement next month. Kingsbury briefly functioned as Kohl’s interim CEO in late 2022 before being confirmed as the permanent CEO in February 2023.
This development arrives as Kohl’s, boasting 1,600 outlets across the United States, continues to grapple with dwindling sales. Their core customer base has been constrained by high costs for essentials, prompting them to cut down on discretionary spending. The retailer also faces intensified competition from giants like Walmart and Amazon, who have enhanced their fashion lines with competitively priced offerings.
Moreover, Kohl’s is navigating through uncertainties tied to extensive tariffs imposed under former President Donald Trump’s administration.
Kohl’s provided a tentative overview of its current quarter’s sales and profits, indicating ongoing challenges but with projections slightly ahead of Wall Street expectations. The company anticipates a comparable sales drop of 4.3% to 4% and a loss per share in the realm of 24 cents to 20 cents for the first fiscal quarter.
Industry analysts had predicted a steeper earnings decline, expecting a loss of 54 cents per share and a 6.4% decrease in comparable sales, as per FactSet data. Kohl’s is scheduled to deliver its final results for the fiscal first quarter on May 29.
Despite these stumbles, Kohl’s shares, hailing from Menomonee Falls, Wisconsin, saw a surge of nearly 9% in late morning trading.