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CEO's rarely admit when they are wrong. However, Kohl's outgoing CEO, Tom Kingsbury , this week acknowledged mistakes that caused a steep drop in the retailer’s quarterly sales. Kohl’s scaled back popular private-label brands, fine jewelry, and petite clothing sizes—moves that turned off shoppers and contributed to a 9.3% drop in quarterly sales. Without the lift from SEPHORA, which has shops inside Kohl’s stores, sales would have dropped even more. While #inflation and other macroeconomic events played a role, many problems were self-inflicted. “It’s up to us to fix it,” Kingsbury said. Or rather, it will be up to Kingsbury’s successor. A day before Kohl’s reported its disappointing earnings, the company announced a leadership change: Ashley Buchanan, a former Walmart executive currently the chief executive of Michaels Stores, will take over in January. Kingsbury will remain in an advisory role and retain his board seat until he retires in May. Kohl’s was in trouble before Kingsbury, a retail veteran, took the reins, first as interim CEO in late 2022 and then as permanent CEO a couple of months later. Sales have declined for 11 consecutive quarters, and more than half a billion in sales have evaporated. Kohl’s shares are down 52% over the past two years. It is a surprising outcome given Kingsbury’s pedigree and the fact that he was installed on Kohl’s board at the behest of activist investors, who had pushed for the company to run itself more efficiently. A former May Department Stores executive, Kingsbury worked briefly at Kohl’s before becoming CEO at Burlington Stores, Inc., where he led a turnaround from 2008 to 2019. His priorities at Kohl’s included making its stores and website better places to shop, offering clearer value, improving inventory management, and strengthening the balance sheet. Many of the moves backfired. Kohl’s scaled back its fine jewelry departments to make room for Sephora shops in its stores, which upset customers. In an effort to carry less inventory, it reduced its selection of clothing in petite sizes—a decision Kingsbury called “shortsighted.” And in another attempt at reducing inventory, it cut back on private label brands like Sonoma and FLX, as it stocked more national brands such as Nike and Eddie Bauer. The retailer’s private-label inventory dropped on average by more than 20% and even more sharply for several key brands. “We thought, ‘We can do more with a lot less,’ and that didn’t work out for us,” Kingsbury said. Now, Kohl’s is reversing those moves. It has reintroduced jewelry to 200 stores. It is expanding its petite offerings and is stocking more private-label goods. Kingsbury said he expects those efforts to translate into better sales late this year and early next year. Many of Kingsbury’s initiatives are works in progress and are gaining momentum. https://lnkd.in/e6sRiukq
Maxime Ko
4mo
This is unfortunate. Jumping Beans was the best kid brand for the 3-6 yo age group - high quality and better than Old Navy. I hope that one survived.
For anyone who is a Kohl's shopper the store experience has been a constant decline unfortunately. After reading this, I wonder if Tom Kingsbury really understood the brand and the customer base vs. trying to replicate the success at Burlington Stores, Inc. I have seen that situation play out before with other executive transitions and brands, in my opinion. It makes me wonder how some of the retail CEOs are chosen and how much time is really spent on understanding the candidate's vision for the brand? I do hope Kohl's bounces back quickly. It is a great concept, with easy access, and reasonable prices for shoppers.
Mike H.
4mo
Im not sure this particular comment on why they were struggling from Kingsbury is relative, they have so many strategic issues that will require much more than reversing course on private label, (that wasn't getting them anywhere either before which is why he made the change, so why would it be relative to change it back), fine jewelry not a Kohls strength regardless and petite sizes doesn't explain the lack of a price/value strategy in clothing that consumers are gravitating to today... Not to mention the parasite relationships they have entered into trying to draw more traffic which also hasn't resulted in any substantial growth.... .....this has very little chance to turn around without significant strategic change at a very high cost regardless of who is at the helm......
Mike Edwards
4mo
It is refreshing with his honesty . However he is on his way out and he is trying to position the next CEO for success. Retail is a simple game over all. You have to Gain more Customers, Keep your customers, and Stop customers from leaving. Category/brand adjustments and help turn the trends but it is not the silver bullet. The store profitability and traffic patterns tell a richer story. This is a restructuring story not a growth opportunity . The focus has to strengthen the balance sheet, cut expenses , get out of unprofitable categories and stores and grow the online business. I sincerely wish the new CEO all the best. It's going to be a painful ride. --
Tim Kuckelman
4mo
Unfortunately, you can’t cost cut yourself out of soft sales. Nothing makes up for a shrinking business and it’s all about having the right product and an in-store experience that people want. National brands are excluded from discounts, so it should have been obvious sales would fall with fewer private label brands. Margins would also be worse. Private label has been the hallmark of Kohl’s - Nike and Adidas can be found everywhere. Customers want something unique and cutting private label reduced offerings and replaced them with items with worse discounting and pricing. Lower staffing in stores and out of stocks on key items and sizes has been a chronic problem. If you carry a style, then you should always be in stock on that item in every size and color and it should be where it belongs in the store. Period. Holes in the assortment are frustrating to Customers. Saying “you can buy it online” only teaches the Customer to not bother visiting your stores. And the cycle continues - lower traffic begets less inventory begets lower traffic…. This is a great brand and Retailer with very smart people who can make all of this happen. Hopefully, new leadership will figure out how to solve these complex problems. I wish them luck.
Nancy Mair
4mo
Accountability, not found very often lately. It's good to take a few steps back, see what's working and what is not. It's never a good idea to just reduce private brands that much however they are in desperate need of reinvention. Hope they react with urgency to win back the female customer.
Scott Petinga
4mo
Here’s how I see how leadership failed: misalignment with customer values, tone-deaf, marketing messages, failure to adapt to retail trends, ineffective, product curation, and lack of bold strategic moves. Ashley Buchanan I’ll help you turn the ship around.
Seana Turner
4mo
I'd be very happy if they brought back petites. There are so few stores that carry them, it forces us to online retailers. I used to shop there a lot, but haven't in years because there was nothing to buy.
It's refreshing to see a leader take accountability and address the self-inflicted issues. Understanding where we’ve gone wrong is the first step to meaningful change, whether in business or health.
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4moThank you for sharing this insightful update on Kohl's leadership transition and strategic initiatives. It's commendable to see Tom Kingsbury acknowledge the challenges and take responsibility for the missteps. The retail landscape is ever-evolving, and adapting to consumer preferences is crucial for sustained growth.