Kohl's Short-Lived CEO Faces Dismissal Over Unethical Conduct

Kohl’s has parted ways with its newly appointed CEO, Ashley Buchanan, after less than five months on the job due to unethical conduct. The retailer terminated Buchanan “for cause,” a significant measure which indicates serious misconduct in the business realm. This decision followed an external counsel investigation revealing that Buchanan directed the company into vendor transactions involving undisclosed conflicts of interest, as stated in a press release.

The company clarified that Buchanan’s termination had no relation to Kohl’s overall performance, financial reporting, operational results, nor involved any other employees. Buchanan, who previously served as the CEO of the arts and crafts chain Michaels, assumed the role at Kohl’s on January 15, with hopes of revitalizing the struggling retailer. Unfortunately, under his brief leadership, sales declined by as much as 4.3%, according to preliminary earnings reports.

To steer the company forward, Michael Bender, current chairman of Kohl’s board, has stepped in as the interim CEO while a search for a permanent replacement is underway. The announcement of Buchanan’s departure positively impacted Kohl’s shares, causing them to rise by up to 8% in trading.

Neil Saunders, managing director of GlobalData Retail, remarked that Buchanan’s exit is an unwelcome diversion for the company, which can ill afford such disruptions. “Although the dismissal is unrelated to company performance, it suggests Kohl’s is trapped in ongoing disorder and prompts questions about the diligence of his hiring,” he commented, describing the situation as a “blow upon a bruise” for the retailer.

In recent years, like many department stores, Kohl’s has been caught in a struggle amid changing consumer habits. The company is also facing competition from online retailers, battling high inflation, and now the effects of reduced consumer spending due to economic uncertainty.

Additionally, Kohl’s announced the closure of 27 locations, which will leave about 1,100 stores in operation.