New Kohl's CEO Buchanan takes over as sales lag. His moves could affect thousands of jobs

Ashley Buchanan takes over Wednesday as the new Kohl's CEO — the company's third leader in four years — at a time of store closings, declining sales and a stock price that's fallen by 50% in the past year.

It's unclear what steps and how swiftly he will move to right the ship of the Menomonee Falls-based retailer with more than 1,150 stores and some 90,000 employees.

But hints stand out on his resume — including, most recently, four years as the leader of crafting giant Michael’s Co. where he struck a deal to sell the company to private equity investors. Such a move at Kohl's could have a dramatic impact on the roughly 4,000 Milwaukee area corporate employees and thousands of other workers around the state.

“Everyone who works at Kohl’s should be concerned,” said Brittain Ladd, a strategy and supply chain consultant and former executive at Amazon, and former supply chain consultant with Kroger. “Kohl’s is in a downward spiral.” 

Buchanan has not elaborated about why he joined Kohl's and what he plans to do as the company's new leader.  He was not made available for an interview.

“CEOs who have a track record of success in turning around one company, which he does with Michael’s stores... they tend to follow the same playbook,” said Margaret Hughes-Morgan, professor at Marquette University who has experience on Wall Street. “If that’s the case, then he will probably try to take (Kohl's) private.”  

What changes did Buchanan make at Michael's?

During Buchanan's time at Michael's, the company took several steps to appeal to younger shoppers, and then made a major move.

Michael's struck an unusual deal with the online grocery platform, Instacart, to allow for makers to order supplies online and have it to their house in a few hours. The company also sent out press releases based on “surveys” it did on how Millennials and Gen Z shoppers view Halloween and the holiday season.  

And at the end of 2020, which was a difficult year for all retailers, Michael’s used $10 million to pay a bonus to its employees. 

But Buchanan’s most important move came a year into his tenure when he struck a $5 billion deal with Apollo Global Managment, a private equity firm.

Hughes-Morgan and other observers think the same approach could be in store for Kohl's.

“There will be some cost cutting, there’s no question about that,” Hughes-Morgan said. “But I also get the sense that there’s some excitement. Because it’s something new, it’s not somebody who’s internal so maybe they can really shake things up.”  

Ladd believes Buchanan is the person to find a buyer for Kohl's.  

“He’s arguably one of the most skilled CEOs at taking a company private through a PE firm and bringing a company back out again,” Ladd said.  

Ladd argues if Kohl’s board of directors wanted someone to change the trajectory of the company while keeping it public, they would have hired someone else.  

“They could have gone after one of the executives at Target or something like that. But that’s not what they’re doing,” Ladd said. “What this says to me is that the board has given up, they know they’re not turning around Kohl’s.” 

David Swartz, an analyst at Morningstar who follows Kohl’s, disagrees.

“Nothing that I’ve seen from Kohl’s, from the board and from the management, has really suggested to me that they really want Kohl’s to go private,” Swartz said, noting that such a move was a possibility.  

Kohl's seen as a key employer in southeastern Wisconsin

Kohl's has a history of being a supportive business in the southeastern Wisconsin community, and that should continue under Buchanan, said Dale Kooyenga, president of Metropolitan Milwaukee Association of Commerce.

“The process of companies going public and private and back and forth, that’s just the nature of business. And more often than not that does not mean a location change in that,” Kooyenga said. “I’m confident that the talent that they have here in Wisconsin is the talent that is among the best in the world. And there would be no clear benefit to moving a company outside of the region.”  

By being headquartered in Wisconsin, Kooyenga feels Kohl's is in a good location to understand the shopping preferences of large portions of the country.

“A lot of retailers that have been more long lasting have that middle of the country, grassroots feeling,” Kooyenga said. “Walmart has continuously been successful by serving a broader segment of America and Kohl’s is in the center of America here in Wisconsin. And I think they have a strong brand.”  

Hughes-Morgan said Kohl’s is “a valuable brand with some valuable real estate.”  

“Kohl’s is not going to go away,” Hughes-Morgan said. “They might have to restructure, and Ashley Buchanan has got his work cut out for him. But I think what will likely happen is they’ll, at least, explore taking the company private.” 

Could a company like Amazon be interested in Kohl's?

This isn't the first time that in recent years that the idea of an outside investor for Kohl's has come up. In 2022, Kohl's was negotiating a deal with Franchise Group Inc., the operator of Vitamin Shoppe.

Franchise Group reportedly offered to buy Kohl's for $9 billion, or roughly $69 per share which is significantly higher than the current stock price of about $13.35.

Ladd believes Amazon could be a potential buyer of Kohl's. He advocated for the online giant to acquire Whole Foods years before it made that move.  

“Amazon’s biggest weakness is they don’t have stores,” Ladd said. “Acquiring Kohl’s or expanding their partnership with Kohl’s would be a really wise move on their part.” 

Kohl’s already has a partnership with Amazon where customers can return and receive items they ordered on Amazon. 

The deal was started under then-CEO Michelle Gass, but while working with Amazon is normally a benefit for companies, Ladd said this was not a good deal. 

“She turned Kohl’s into Amazon’s post office,” Ladd said. 

However Ladd emphasized he doesn't believe the first thing Buchanan will do is sell the company but “I believe those (options) will absolutely be discussed. "

“Kohl’s honestly doesn’t have a future unless they are willing to think big and make massive changes to their stores and become much more strategic in the partnerships that they sign,” Ladd said, noting the company's partnership with Sephora for "stores within a stores" at many locations.

“Sephora isn’t enough. Kohl’s has to do much more. And I think the wildcard to their success is expanding the partnership with Amazon. If they do that, it will absolutely change the future of the company.” 

If Amazon wanted to acquire Kohl’s, Swartz questioned why the company hadn’t done so already. 

“Amazon could easily buy Kohl’s with the spare change in Jeff Bezos’ couch,” Swartz said. “I don’t think it’s going to happen because I don’t think they want to take on the headache of managing a retailer with 1,180 stores.” 

But finding a potential buyer that can boost the valuation of Kohl’s is not easy and Swartz said simply having enough money is likely not enough.  

“If Kohl’s was put up for sale, I think a buyer would be found. I don’t think it matters who the CEO is,” Swartz said. “I don’t see Kohl’s being sold, though, at this extremely low valuation... they’re in a strange position right now because the valuation is so low, I think they could easily sell the company to a private equity buyer but what would be the point of that? It would be disastrous for the shareholders.” 

But Kohl's' challenges might be beyond its walls.

"Kohl's is its own entity... it's got its own niche," Hughes-Morgan said. "The problem is that people who fill that niche is shrinking. It's the middle class."