The retail sector at large seems to be downsizing in recent months. Aside from maybe Costco, there are almost no retailers who can say that they have been unaffected by the current economic climate with its increasing inflation rates and static job markets.
Kohl’s, perhaps one of the largest retailers in the United States has fared no better during these testing times and as such the department store giant will also be undergoing a company restructuring in the form of store closures and layoffs.
Store closures and layoffs at Kohl’s
If the retail apocalypse continues to leave its trail of chaos throughout the retail sector at the alarming rate that it is, we may not even have a retail sector left soon. Shuttering underperforming stores has been to go-to solution to help minimize losses in recent months, possibly even years but never has the sector seen it occur on such a massive scale.
Lat year alone, a whopping total of 7,300 stores were closed, recording an astounding 57% increase from that of the prior year, according to data collected by Coresight Research. Since 2020, this is the highest recorded number of annual store closures. This is especially concerning because the retail sector struggled in 2020 due to the growing effects of the COVID-19 pandemic and lockdown stipulations. It is scary to realize how despite living in a post-pandemic era, the sector is now recording closures on the same scale as in 2020.
Department store giant, Kohl’s, is currently in the process of shutting down a number of its store due to underperformance as well. This retailer in particular has been struggling for several years now and as such, in January, the company announced it will be enacting a necessary round of store closures so as to remain profitable.
Consequently, twenty-seven underperforming Kohl’s department stores spanning fifteen states will be permanently closed by April 27.
Downsizing its real estate footprint is not enough to keep the company afloat, however, and it has also been decided that the corporate workforce will face a 10% cut. According to the retailer, the reasoning behind such a big round of layoffs is aimed at supporting “Kohl’s ongoing actions to increase efficiencies and improve profitability for the long-term health and benefit of the business.”
Additionally, in a statement made to Fortune, Jen Johnson, the SVP of corporate communications for Kohl’s said, “Knowing the impact this has on our associates, we took this decision very seriously. The [store] closures and the corporate workforce reduction are both actions to support our commitments to increase efficiencies and improve profitability in the business for the long-term benefit of our associates and customers.”
Employees impacted by the layoffs will receive two weeks worth of pay as well as a competitive severance package, according to the company and they have already been notified of the termination of their employment. Alternatively, the laid off employees could apply to be transferred to any other available job openings with Kohl’s.
Kohl’s under new management
The department store retailer also recently announced Ashley Buchanan as its new CEO after it was decided that Tom Kingsbury would step down. Buchanan was previously the CEO of popular crafts retailer, Michael’s. This announcement also marks the third CEO change for the company since 2018.
An admirable quality of Kingsbury was their willingness to admit to any mistakes. In an earnings call, Kingsbury stated, “We thought, ‘We can do more with a lot less,’ and that didn’t work out for us.”
Whilst the future of the retailer is still up in the air, Buchanan shared the following statement with Kohl’s employees, “While I know this has been a challenging time for Kohl’s, I also know that this is a great company and a very strong brand. We will work to create a more sustainable plan for growth. This will not happen overnight.”