After a short stint as the CEO of Kohl’s, Ashley Buchanan has been removed from the position, the company said in an announcement on Thursday. Buchanan, who took up the leadership role at the company this January, was dismissed after an investigation revealed he directed the company into vendor transactions involving a personal relationship, violating company policies.
Highlights
- An undisclosed conflict of interest revealed in an investigation led to the dismissal of Kohl’s Corporation CEO Ashley Buchanan.
- The company has appointed an interim CEO to take his position and is on the lookout for a permanent replacement.
- Kohl’s is grappling with ongoing struggles with falling sales and stores being closed down.
Investigation Revealed the Ex-CEO’s Conflicts of Interest
Ashley Buchanan was terminated from his position as he “violated company policies by directing the company to engage in vendor transactions that involved undisclosed conflicts of interest,” according to the stated cause for his dismissal. His conduct breached the company’s code of ethics.
In an SEC filing, the company disclosed that Buchanan had “directed that the Company conduct business with a vendor founded by an individual with whom Mr. Buchanan has a personal relationship on highly unusual terms favorable to the vendor.” The filing also noted that “he also caused the Company to enter into a multi-million dollar consulting agreement wherein the same individual was a part of the consulting team.”
The evidence for the violations of company policies was found in an external investigation conducted by outside counsel, overseen by the audit committee of the board. Furthermore, Buchanan will no longer be a part of the company’s board. The nomination for him to be elected as a director at the annual meeting of shareholders in May 2025 has been withdrawn as well.
Per the SEC filing, Buchanan must reimburse Kohl’s $2.5 million from his signing bonus and relinquish all associated equity awards. The press release on the matter also assured that the decision to fire the CEO was “unrelated to the company’s performance, financial reporting, results of operations, and did not involve any other company personnel.”
Buchanan Failed to Fix Kohl’s Troubles
Kohl’s has been struggling over the past few years due to a drop in sales, stores closing down, and strong competition, among other factors. Buchanan was brought in with the hopes of changing the situation and remedying the downturn.
However, the company’s fourth-quarter results for 2024 revealed a 9.4% decrease in sales and a significant 74.2% drop in profit during the crucial holiday season. The company also anticipates a comparable sales decline of approximately 4.0% to 4.3% and a net loss ranging from 20% to 24% per share for the first quarter of 2025.
Interim CEO Appointed
As Ashley Buchanan leaves the company, a new interim CEO has been appointed until a replacement is found. Michael Bender, who has chaired the company’s board of directors since May 2024, will be taking up the role. As he has taken up the role of CEO, he will be stepping down from the committees of the board that he is a part of.
In a statement about the new Interim CEO, John Schlifske, chair of the nominating and ESG committee, said, “Michael brings over three decades of leadership experience across retail and consumer goods companies, having served as CEO of Eyemart Express and in senior roles at Walmart, L Brands, and PepsiCo. We look forward to continuing to work closely with Michael as Kohl’s remains focused on operational excellence, simplification, and efficiency to improve long-term financial health and profitability.”
The company will start the search for a permanent CEO, as per the announcement. It will employ “a leading search firm to assist with this process.”
Share Prices Soar Following the News
Following the announcement of Ashley Buchanan’s firing and Michael Bender’s appointment as interim CEO, Kohl’s stock prices rose by about 8%.
Kohl’s is in quite a predicament at the moment, with the situation with the now ex-CEO making things worse overall. The retail giant will now have to find stern and consistent leadership and make smart and bold decisions to retain its business in the rapidly changing retail market.
