During these times of financial struggles, Kohl’s, much like many of its peers in the retail sector, has had to make some tough decisions in order save the company from going completely under. The department store chain had previously been one of the largest retailers in the country, however, recent years have recorded a persistent decline in sales, as well as a drop in stock value and customers have steadily been losing confidence in the company.
Restructuring at varying levels has been to go-to resolution for many struggling retailers for the past few years. Many have chosen to close down underperforming stores so as to minimize losses, whilst others felt change was needed at the higher levels of operations as well. Kohl’s appears to be of the latter and the company recently welcomed in a new CEO who has high hopes to change the fate of Kohl’s for the better.
New CEO steps up to run Kohl’s
Just this month, Ashley Buchanan has taken the reins at Kohl’s and hopes to usher in a new wave of customers for this struggling department store chain — which may prove to be easier said than done.
Over the years, the department store giant has been no stranger to questionable executive decisions, however, there are external factors contributing to the decline of sales and customer confidence as well. A commonly shared ailment faced by retailers is the lingering effects of the COVID-19 pandemic. Growing inflation rates and a customer preference for online shopping has also been a direct hit on retailers causing them to downsize, if not file for bankruptcy.
For Kohl’s, restructuring operations by downsizing proved to be its downfall. Tom Kingsbury, the previous CEO, made the decision to downsize private label items, petite clothing sizes, as well as fine jewelry departments. These were then replaced with Babies “R” Us stores and Sephora cosmetics.
Kohl’s generally caters to middle-income earners by offering good quality at affordable rates and as such, the decision to steer away from private labels in lieu of these commercialized brands was not well received by customers. However, the company had an excess of inventory at the time which it could not push out, prompting Kingsbury to make these changes.
According to marketing professor at the University of Chicago Booth School of Business and research associate at the National Bureau of Economic Research, Jean-Pierre Dubé, “If you want to keep stores open, you’ve got to give people reasons to shop in your store.”
Recent company history
The retailer’s struggles go back several years it seems. When Kingsbury took over Kohl’s as CEO in 2022 — after serving as an executive at Burlington Stores — the company had already been struggling financially. Sales had shown a consistent decline for 11 quarters. Stock value also plummeted by almost 50% in the past year alone.
“Kingsbury disconnected from their core customer and failed to connect with the younger generation that he was presumably going after,” Dubé noted.
According to the third-quarter results of November 2024, the company opened 140 Sephora stores and whilst the introduction of Sephora stores did cause a slight uptick in sales, it still fell short in offsetting losses from other departments like apparel, footwear, home, and jewelry.
During Kingsbury’s run as CEO, “there was really a focus on inventory management and efficiency, and as part of that push they really started to pare down their selection of apparel,” Charles Lindsey, an associate professor of marketing at the University of Buffalo observed.
When these strategies did not prove to be fruitful, Kingsbury did acknowledge his mistakes. “We are not satisfied with our performance in 2024 and are taking aggressive action to reverse the sales decline,” he stated.
It is not yet certain what Buchanan’s plans for the company are, however, their predecessor has outlined a plan to improve sales by essentially undoing his initial changes by expanding private label inventory, reintroducing petit size ranges, and fine jewelry departments in 200 locations.