By Juveria Tabassum
(Reuters) – Kohl’s said on Thursday it had fired CEO Ashley Buchanan after an investigation found he had pushed for deals with a vendor with whom he had a personal relationship, after little more than 100 days in the CEO job.
Buchanan engaged in transactions with this person’s company on “highly unusual terms”, Kohl’s said in a filing, and also caused the company to agree to a multi-million-dollar consulting agreement with a team that included this person he was involved with. He also did not disclose the relationship, the company said.
Buchanan’s firing makes the third change at the helm in as many years for the beleaguered department-store retailer, which has been struggling with several quarters of sagging sales due to stiff competition from e-commerce firms and big-box retailers such as Walmart, as well as its own strategic missteps.
Kohl’s shares rose 8.4% on Thursday, as it reported better-than-expected preliminary first-quarter earnings, but the stock is still down roughly 70% over the last year.
Buchanan was not immediately available for comment when contacted on LinkedIn, while Kohl’s declined to provide further comment.
Buchanan was named CEO in November, replacing Tom Kingsbury. After he took over as CEO in January, Kohl’s cut about 10% of its corporate workforce to improve profitability.
“(Kohl’s) desperately needs stability and changes in its business model. However, it’s better to make the move to fire Buchanan rather than let the situation get worse,” Morningstar Research analyst David Swartz said.
Buchanan is forfeiting all stock awards he received, including $15 million in restricted stock that was meant to vest over three years as long as he was still employed with the company. He also has to reimburse the company for $2.5 million of his $3.75 million signing bonus.
Buchanan joined Kohl’s from Michaels Companies, a specialty retailer of arts and crafts supplies, where he was CEO since 2020. He was also the chief merchandising and chief operating officer for Walmart U.S. e-Commerce prior to that.
Kohl’s expects first-quarter comparable sales to fall between 4% and 4.3%, compared with analysts’ average expectation of a 6.34% decrease, according to data compiled by LSEG.
The company expects a loss per share in the range of 20 cents to 24 cents, compared with estimates for a loss of 52 cents per share.
Kohl’s will report first-quarter results on May 29.
Buchanan’s removal does not affect Kohl’s financial reporting or other employees, the company said. It named Michael Bender as its interim CEO, effective immediately, and said that the search for a permanent chief executive would begin soon.
(Reporting by Juveria Tabassum in Bengaluru; Editing by Shounak Dasgupta, Anil D’Silva and Pooja Desai)
