Kohl’s said it has terminated its new CEO Ashley Buchanan after an investigation determined that he directed the retailer to engage in vendor transactions that involved undisclosed conflicts of interest.
Kohl’s named Chairman Michael Bender as interim CEO, effective immediately. In connection with the appointment, Bender will step down as a member of the board’s audit, compensation and nominating and environmental, social and governance committee, according to the retailer’s regulatory filing.
The news comes less than four months after Buchanan, who had been previously the CEO of arts and crafts chain Michaels, took over the job on January 15. Buchanan’s appointment marks the third CEO for Kohl’s in three years as the department store struggles to reverse sluggish sales.
Kohl’s said Thursday that Buchanan’s firing is unrelated to its performance, financial reporting, results of operations and did not involve any of its other employees.
Kohl’s will conduct a search for a permanent CEO and said it will name a new chair in due course. The company couldn’t be immediately be reached for comment. Buchanan didn’t immediately return a message sent to his Linkedin account.
According to the Securities and Exchange Commission filing, Buchanan’s termination follows a probe conducted by outside counsel and overseen by the board’s audit committee. It found Buchanan had directed Kohl’s to conduct business with a vendor founded by an individual with whom Buchanan has a personal relationship on “highly unusual terms favorable to the vendor” and that he also caused Kohl’s to enter into a multimillion-dollar consulting agreement with the same individual who was a part of the consulting team.
It also found that in neither case did Buchanan disclose this relationship as required under Kohl’s code of ethics.
In connection with his termination and in accordance with the terms of his equity award agreements, Buchanan will forfeit all equity awards he received from the company, including the recruitment awards made as of January 15, according to the filing. Buchanan will also be required to reimburse Kohl’s for a pro rata portion of his signing incentive in the amount of $2.5 million, according to the documents.
As a result of Buchanan’s termination, the board has determined to withdraw his nomination for election as a director of the company at the company’s annual shareholders’ meeting to be held on May 14.
Buchanan had succeeded Tom Kingsbury, who stayed on as an adviser and is retaining his position on Kohl’s board until his retirement next month. Kingsbury served as Kohl’s interim CEO in December 2022 and was named its permanent leader in February 2023.
The firing comes at a time when Kohl’s, which operates 1,600 stores across the country, is wrestling with sluggish sales. Its middle income shoppers have pulled back on discretionary spending in the face of still-high prices for necessities. It’s also faced stiff competition from Walmart and Amazon, which have been improving their fashion offerings at affordable prices.
And like other retailers, it is confronting uncertainty surrounding President Donald Trump’s expansive tariffs.
On Thursday, Kohl’s offered a preliminary look at sales and profits for the current quarter that showed continued weakness, though the expected results are on track to beat Wall Street estimates. It said that it expects to report a decline in comparable sales — those coming from established physical stores and online channels — in the range of 4.3% to 4%, and a loss of 24 cents to 20 cents per share for the fiscal first quarter.
Analysts expected earnings per share loss of 54 cents and a drop in comparable sales of 6.4%, according to FactSet.
It expects to report final fiscal first-quarter results on May 29.
Shares of the company, based in Menomonee Falls, Wisconsin, rose nearly 9% in late morning trading.
