Kohl's shares fell sharply on Tuesday after the company's earnings missed Wall Street estimates and following its announcement that CEO Tom Kingsbury will step down in January.
The weak forecast underscores an uncertain holiday season for the retail sector, which could lean in favor of competitors such as Walmart and Amazon.com as customers turn increasingly bargain-focused.
"Our results did not meet expectations, and we're frankly disappointed sales have been a challenge for us throughout 2024 and weakened further in the quarter," outgoing CEO Tom Kingsbury said in a post-earnings call.
Michaels CEO Ashley Buchanan will take over the company on Jan. 15, though Kingsbury will stay on in an advisory role and retain his position on Kohl's board through his retirement in May 2025.
Buchanan, an industry veteran, has been leading Michaels Companies since 2020. Prior to that, Buchanan held senior executive roles at Walmart and Sam's Club.
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Kingsbury served as interim CEO after former CEO Michelle Gass was tapped to take over Levi Strauss & Co. in November 2022. Kingsbury agreed to stay on as Kohl's permanent CEO through 2025.
Under Gass' leadership, activist investor Ancora Holdings Group pressured the company to replace her and improve the business' performance. It wrote a letter to the board in 2022 saying the retailer needed leadership that would implement a precise turnaround strategy so it could start producing enhanced value for shareholders.
Under Kingsbury, Kohl's Board Chair Michael Bender said the company was "undergoing a transformation to elevate its product portfolio, enhance the store experience and improve its long-term financial health and profitability."
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However, in August, net sales declined 4.2%, and sales at stores open for at least a year fell 5.1% during the three-month period ending on June 30.
At the time, Kingsbury said the company had "taken significant action to reposition Kohl’s for future growth" but that its "efforts have yet to fully yield the intended outcome due in part to a continued challenging consumer environment and softness in our core business."
Among the issues the company faced, Kingsbury noted that "customers exhibited more discretion in their spending," further pressuring the company's sales.
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Despite this, Kingsbury said the company's conviction in its "strategy remains strong and our operating discipline, solid cash flow generation, and healthy balance sheet will continue to support us as we work to return Kohl’s to growth."
Reuters contributed to this report.
