Will Kohl’s new CEO prove to be a good shepherd or a wolf in sheep’s clothing?
Photos: Wikipedia; Getty Images/Lokibaho

Will Kohl’s new CEO prove to be a good shepherd or a wolf in sheep’s clothing?

Tom Kingsbury is no longer the interim CEO of Kohl’s. The company yesterday confirmed earlier reports by formally announcing that Mr. Kingsbury has been named to the position on a permanent basis while continuing to serve on its board of directors.

Mr. Kingsbury follows Michelle Gass, who left Kohl’s in December after a contentious tenure during which she battled activist investors who at various times pushed for a sale of the company, and wanted to spin off its real estate assets and split its stores and online operations into separate publicly traded businesses.

Kohl’s new CEO came to the job as part of an April 2021 deal that the retailer’s leadership and board made with those activist inventors, Macellum Advisors and Legion, to appoint directors they supported. Mr. Kingsbury officially joined Kohl’s board in October 2021 following the close of its annual meeting of shareholders.

Retail experience will not be an issue for Mr. Kingsbury as he formally takes the leadership helm at Kohl’s. He boasts more than 40 years in the business, including serving as president and CEO of Burlington Stores between 2008 and 2019. He was SVP, information services, e-commerce, marketing and business development at Kohl’s between 2006 and 2008. Mr. Kingsbury currently serves on the boards of Big Lots, BJ’s Wholesale Club and Tractor Supply in addition to Kohl’s.

“This is a pivotal time for Kohl’s, and I am excited and energized to work with our talented team to elevate our performance and create value,” said Mr. Kingsbury in a statement. “During the last few months, I have seen the passion and dedication of the Kohl’s team and the unique value we can bring to our customers nationwide. I look forward to partnering with the board and leadership team to build on our strengths and deliver on our strategy for our shareholders and other stakeholders.”

Kohl’s has struggled to distinguish itself from its competitors in recent years as first the pandemic and then supply chain challenges and inflation took a toll on its performance. The retailer under Ms. Gass sought to expand its presence in athleisure, build its private brand contribution and forged brand partnerships (Amazon.com, Levi’s and Sephora) but failed to gain the traction many thought it should. The chain  in November posted a net sales decrease of 7.2 percent with comps down 6.9 percent.

BrainTrust

"I suspect one of the reasons he was appointed permanent is because they could not find anyone else to take the job."

Gene Detroyer

Professor, International Business, Guizhou University of Finance & Economics and University of Sanya, China.


"And now it gets interesting. Will the first couple of announcements be about customers, products, merchandising and marketing or real estate, operations and finance?"

Jeff Sward

Founding Partner, Merchandising Metrics


"In terms of experience and knowledge of retail, this is a solid appointment. What worries me, however, is the standstill agreement made with activist investors."

Neil Saunders

Managing Director, GlobalData


Discussion Questions

DISCUSSION QUESTIONS: What do you think Tom Kingsbury needs to do as he takes on the Kohl’s CEO role on a permanent basis? What do you think is likely to happen to the chain’s performance?

Poll

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Mark Ryski
Noble Member
1 year ago

Mr. Kingsbury appears to be a choice all parties can agree with – even the activists. The challenges Kohl’s faces are well understood, and Mr. Kingsbury has had a front-row Board seat to see it all. And while it’s likely that the chain’s performance may get a little worse before it gets better, what I’ll be watching for is the trajectory and level of innovation. New initiatives, ideas, concepts and most importantly, how these get executed. Good luck Mr. Kingsbury.

Neil Saunders
Famed Member
1 year ago

In terms of experience and knowledge of retail, this is a solid appointment. What worries me, however, is the standstill agreement made with activist investors. What has been promised to secure this? Selling off real estate? Splitting off e-commerce? Something else that will be detrimental in the long term? Only time will tell, but if this is the case, Kohl’s is in for a bumpy ride. The whole and immediate focus should be on rebuilding the proposition, not playing financial games with the company.

DeAnn Campbell
Active Member
1 year ago

His biggest challenge will be to not let the urgent drown out the important because he will have a lot to do. Kohl’s still has a small window of opportunity to remain relevant, but it will take a lot of work across multiple departments. Their business model and branding are perfect — for the 1980s — so bringing their processes into alignment with today’s multi-channel shopper will be critical.

They have the benefit of some great brand partnerships like Nike and Vera Wang, but these aren’t merchandised effectively. Their Sephora shop-in-shop is completely walled off from any Kohl’s experience which de-motivates Sephora shoppers from exploring the rest of the store.

The discount middle is a dangerous place to be; you only have to look at JC Penney or SteinMart to see that retailers in this zone don’t have the same appeal to discount shoppers as stores in the TJX family that offer more of the treasure hunt experience. But they’ve chosen a CEO who has a solid background to turn Kohl’s around.

Gene Detroyer
Noble Member
Reply to  DeAnn Campbell
1 year ago

I love it …”Their business model and branding are perfect — for the 1980s…”

Nicola Kinsella
Active Member
Reply to  DeAnn Campbell
1 year ago

Totally agree with all of this DeAnn. And while higher end apparel retailers have got the private label thing right, in the women’s apparel at Kohl’s it almost feels like a treasure hunt experience without the thrill of finding a name brand at a deep discount. Their overall merchandising strategy definitely needs work.

Robin Mallory
Robin Mallory
Reply to  Nicola Kinsella
1 year ago

Re: the merchandising and inventory … I’d really like to see how they use qualitative info. From surveys/panels of top tier customers, to positive/negative comments on the site. That folds into CX and brand revitalization. (This is not a silo in a boardroom.)

Sad that the activists (non retailers) wasted so much of the corporate energy. But now is the time to breathe in what the customer sees, good and bad. Roadmap easier + harder wins on the same path.

Don’t make customers wait to see improvements they want.

Brad Halverson
Active Member
Reply to  DeAnn Campbell
1 year ago

Agree, the “discount middle is a dangerous place to be,” as you point out is key. Change will require tough decisions, to take some risk. If they create a more compelling go-to-market strategy, brand themselves toward this shift, and execute in store — they’ll be competing again.

David Spear
Active Member
1 year ago

Mr. Kingsbury takes the helm while the company is in dire straits, and so bold actions are required. He should consider closing underperforming stores and get back to the basics of store appearance, clean layouts, and new product assortments. He also should take a hard look at the previous partnerships that Ms. Gass brought into the store and pivot away from the ones that are not delivering profitable value to the business. For his e-comm business, he ought to dive deep with analytic rigor and understand his true SKU profitability, so he can make smart decisions on the 20% of products that are driving 80% of his revenue, and begin to purge languishing products that eat into the P&L. He has a lot of tough sledding ahead, but I’m rooting for him!

Gene Detroyer
Noble Member
1 year ago

Kohl’s is a retailer in no-man’s-land. I don’t see any real possibility of turning this around. I suspect one of the reasons he was appointed permanent is because they could not find anyone else to take the job. I also guess he has been given a short rope to stop the decline and, if not, lead the company to maximize shareholder assets in the short term.

Dick Seesel
Trusted Member
1 year ago

I left Kohl’s in early 2006 before Mr. Kingsbury’s previous tenure at the company, but a former colleague who was mentored by Mr. Kingsbury at May Company describes him as a top-notch manager. (His track record at Burlington backs this up.) I also believe the new CEO grew up in the Milwaukee area, steeped in the Kohl’s culture that made it successful in the first place. That doesn’t ensure victory, but it can’t hurt.

None of this forecasts the future for Kohl’s, especially as it tries to leverage the Sephora strategy. (Other initiatives that were supposed to work, like Amazon returns, did not drive incremental sales.) If Mr. Kingsbury can refocus on Kohl’s expense and assortment planning disciplines — while getting some breathing room from activists via the standstill agreement — he can add another success story to his resume.

Jeff Sward
Noble Member
1 year ago

Mr. Kingsbury appears to be a solid choice. And now it gets interesting. Will the first couple of announcements be about customers, products, merchandising and marketing or real estate, operations and finance? There’s work to be done on all fronts, but let’s see where the time, energy and dollars get invested first. If the first investments aren’t in areas immediately observable by customers, then we may have a financial engineering project underway. Not necessarily a bad thing, but retail turnarounds need to be driven by the customer applauding and voting with their wallet.

Rich Kizer
Member
1 year ago

I think this is going to be a rebuilding adventure where all outside experts will be puzzled at first. After that wave passes, and Mr. Kingsbury grabs tightly to the reigns, and those other players in the executive suite drink the medicine, it is going to be a hell of a ride. I think we are all in for a very pleasant rebirth of the company. Stand by!

storewanderer
storewanderer
Member
1 year ago

With as poorly as things went under the previous CEO, he really just needs to stop the bleeding.

I still cannot believe how the previous CEO was allowed to let this once very well run company run on fumes into no man’s land the way she did. Kept getting passes as they were trying to sell the company it seems.

A lot of fairly basic common sense moves with regards to the product mix and presentation would do wonders.

Given the retailers he has been previously involved with, I wonder if a change in pricing strategy would be appropriate at this point.

Given the timing he still has a small window here to get things right for the next holiday season.