Shares of Kohl’s Corporation (NYSE: KSS) were up nearly 10% on Thursday after the company fired CEO Ashley Buchanan after only four months on the job. The retail giant stated that Buchanan’s termination was “unrelated to the company’s performance, which has declined recently amid slumping sales.” The retailer has appointed Michael Bender as interim chief executive officer, effective immediately.
Buchanan’s Termination
Buchanan’s termination comes after an internal investigation by Kohl’s board members who found that the CEO violated the company’s code of conduct twice and was involved in undisclosed conflicts of interest stemming from a personal relationship with a vendor, according to the “Wall Street Journal.”
The board issued an immediate statement that said in part, “Buchanan’s termination is unrelated to the company’s performance, financial reporting, results of operations, and did not involve any other company personnel.”
Buchanan’s Conflict of Interest
The board meeting announcing Buchanan’s termination said that the former CEO “directed Kohl’s to engage in vendor transactions that involved undisclosed conflicts of interest. ” Specifically, the conflicts were Buchanan’s relationship with Chandra Holt, a former colleague at Walmart, according to a Wall Street Journal report. Kohl’s audit committee found Buchanan had not disclosed the inappropriate vendor relationships, for which he was fired for cause.
The company filing, which didn’t specifically name Holt, claimed that the vendor signed a multimillion-dollar consulting agreement with Kohl’s with unusually favorable terms. Buchanan and Holt rose through the ranks at Walmart before leaving around the same time for other positions at Texas-based retailers. Buchanan left in early 2020 to become CEO of Michaels, and Holt left in 2021 to become CEO of Conn’s HomePlus.
The Fallout
According to USA Today, the former CEO’s compensation package totaled more than $29 million. Bender and other board members met soon after Buchanan’s firing to address the new changes and reassure staff. According to securities filings, Buchanan will forfeit all equity awards from the company and be required to reimburse Kohl’s on a pro-rated basis for a signing award worth $2.5 million.
Bender’s appointment as interim CEO makes him the fourth CEO in three years to head the struggling company, plagued by declining sales.
“This is not a moment we expected nor the outcome we wanted for the company and our associates, but it is the right decision for us,” Bender said about the termination.
In conjunction with the leadership announcement, Kohl’s provided preliminary expectations for its first quarter financial results, forecasting sales would likely be down approximately 4%. The company will report the earnings on May 29, 2025.
Buchanan followed Tom Kingsbury, who lasted less than two years on the job after succeeding Michelle Gass, who left Kohl’s for Levi’s.
Declining Sales
Like many modern retailers, Kohl’s faces declining sales and foot traffic. Consumers are spending less money due to rising living costs, and brick-and-mortar stores also suffer, especially when competing with trendy online stores in recent years.
