Store openings, layoffs, profits and executive changes: A year with Kohl's CEO Tom Kingsbury
Tom Kingsbury has been CEO of Kohl’s Corp. for a year, including his time as interim-CEO, and during this time the company has opened stores, laid off workers, recorded profits and executives have left the retailer.
Kingsbury oversaw changes that range from expanding Kohl's' partnership with Sephora, updating the layout of stores, and organizational restructuring.
Some of the changes have been good for the company, including increased profits for several quarters in a row after major losses in 2022. Its partnership with Sephora has rolled out to more than 900 stores and the company believes it can grow it to be a $2 billion business.
But sales have been down for the company.
The company has had layoffs and in recent months Kohl's president departed and the board president chose not to seek re-election.
Some has been the same, including the company’s projection that sales will be lower, which continues the trend from the previous year.
A stronger emphasis on gifts, tighter inventory
Kohl’s is implementing other changes to its stores that it hopes will increase sales including stronger emphasis on gifting and reducing its inventory.
“We are repositioning Kohl’s. We are executing several strategic initiatives that will better position the company to drive improved sales and profitability growth over the long term,” Kingsbury told analysts in November. “We remain in the early innings of our growth initiative. I’ve said many times, it takes time to build businesses.”
More: Kohl's Corp. enters 2023 with 'identity crisis' after rough 2022. What's next for the retailer?
The Milwaukee Journal Sentinel has reached out to Kohl’s to talk to Kingsbury on multiple occasions throughout the year but the company declined to make him available. Kohl's employs roughly 5,000 people in the greater Milwaukee area, mostly at its headquarters in Menomonee Falls. The company has about 7,000 employees statewide.
Kingsbury is in charge of the future of about 1,100 stores and nearly 100,000 workers across the country.
Here is what has been going on with the company under Kingsbury’s leadership.
How did he get into the position?
In 2021, Kohl’s was in a heated fight with activist investors who wanted to make some significant changes.
As a compromise, the board and then-CEO Michelle Gass agreed to expand the board from 12 members to 15, with the investors choosing two of the three new board members.
Kingsbury was one of the board members selected by the investors.
Roughly 18 months later, the company had fended off another proxy fight brought on by the activist investors, Gass resigned as CEO and Kingsbury took over as interim-CEO.
First came layoffs
In late January, the company eliminated 60 positions at the headquarters in Menomonee Falls “to drive greater efficiency in our operations."
"These efforts, which primarily impacted marketing and merchandising teams, reorganized some leadership roles and positions, including the elimination of less than 60 positions,” said Jen Johnson, Kohl's senior vice president of corporate communications, in a statement at the time.
“We put a great deal of planning into this decision and are offering a competitive severance package and out-placement services to all those affected. We appreciate the many contributions of the impacted associates and we thank them for their dedication and service to Kohl’s."
The competition in retail is always fierce but in the state, stores are hiring.
According to the Wisconsin Department of Workforce Development's most recent job data from November, roughly retail added an additional 1,200 workers compared to November 2022.
“Even though we’ve seen consumer spending slow a little bit, it’s still an upward trend,” Scott Hodek, section chief for DWD's Office of Economic Advisors, said on a monthly economic briefing call.
Consumers are still shopping and stores are hiring, which bodes well for Kohl's but also it's competition.
Then the ‘interim’ was dropped, share prices rise
After two months as interim-CEO, Kingsbury was officially named CEO of Kohl’s in February.
“This is a pivotal time for Kohl’s, and I am excited and energized to work with our talented team to elevate our performance and create value,” Kingsbury said in a statement at the time. “During the last few months, I have seen the passion and dedication of the Kohl’s team and the unique value we can bring to our customers nationwide.”
The market responded positively to Kingsbury being named CEO. At the beginning of the year, the stock was trading at $24.55 per share and after the announcement it shot up to $34.76. As of Dec. 29, shares were trading at $28.68, up about 17% for the year.
David Swartz, analyst with Morningstar who monitors Kohl's, said the retail industry has had a "tough year" in general.
“At this point, there’s very little evidence in the numbers that things are really turning around,” Swartz said. “It seems like the company is doing important things that are going to help but really, people are much more focused on next year. And this is kind of a lost year for Kohl’s.”
In March, Kingsbury made his first public comments to investors and analysts when reporting the company’s final quarterly report of 2022 with sales down 7% annually.
“During the past three months I have had the opportunity to assess our go-to-market strategies, our operational capabilities and processes, and our organizational structure,” Kingsbury said at the time. “I’ve also visited a number of our stores across the country and engaged with many of our brand partners.”
During this call Kingsbury talked about some specific changes that were coming to stores in 2023.
One change was moving gift items to the front of the stores. That change was made in December 2022, when he was interim-CEO, to capitalize on the holiday shopping season.
“This proved highly effective, resulting in sell-throughs significantly higher than the prior year,” Kingsbury said.
Another big change was trying to reduce inventory.
“We got out of control in 2022,” Kingsbury said. “We did a good job in 2021, but in 2022 we had a big spike in inventory. So we need to improve those disciplines. We need to be more agile in terms of being open to buy and spend every single quarter so that we can chase the business. It’s better to understand what the customer wants and go after it than to buy it all upfront and hope it sells.”
The same week of the analyst call, Kohl’s announced Dave Alves to be the new president and chief operating officer of Kohl’s. Prior to joining Kohl's, Alves was the president and chief retail officer for Bealls Retail Group, based in Florida and operates more than 650 stores in 23 states.
At the time, Kingsbury said Kohl’s is “thrilled to have Dave join our senior leadership team as we drive the business forward.”
“Dave is joining us at a time when we are elevating our business and our offerings for the next generation of shoppers,” Kingsbury said. “His deep retail background in department stores and off-price, and his experience across U.S. and global markets will be a great addition to our team.”
No drama for board election, positive quarterly reports
After two years of battling with activist investors who wanted to take over Kohl’s board, in May the board, including Kingsbury, was re-elected without a peep from investors.
Two weeks later the company released its first quarterly report under Kingsbury’s leadership, which reported a profit of $14 million.
Kingsbury called the results a “first step in the right direction.”
“Our objective is to show moderate improvement as we move through 2023 and we set ourselves up to accomplish this with our first quarter performance," Kingsbury said.
The company followed up with a second quarter report showing it made $58 million in profit.
Despite the positive return, sales decreased 4.8% for the quarter which was more than in the first quarter, 3.3%.
Part of the decrease in sales was a change to Kohl’s’ online discount offerings.
“Most of our decrease came from digital and that was somewhat self-inflicted because we reduced the amount of ‘online only’ general public offerings,” Kingsbury said at the time, adding the company simplified its pricing strategy. “To have two different pricing strategies just wasn’t good.”
Board president, company president leave
Peter Boneparth had been on the Kohl’s board for 15 years and served at the board president. In early November, a few weeks before the third quarter call, he announced he was not seeking re-election to the board.
It wasn’t completely unusual for someone who served on the board for that long to decide to move on. But that announcement was followed by the news that Alves, who was brought on as president earlier in the year, left the company.
Kohl’s filed a one sentence report with the SEC a day before the quarterly call.
According to Johnson, Alves left the company to “pursue other opportunities.”
Neither the company nor Alves have publicly revealed the details behind the departure.
A day later, Kingsbury was asked about by an analyst about leadership changes at the company.
Kingsbury said there “will be no backfill" on the position previously held by Alves.
"Stores and supply chain will now report to me with other executive leaders assuming oversight of other functions, real estate, purchasing, risk management and strategy.”
Another positive quarter
On the heels of change at the executive level, Kohl’s reported a $59 million profit in the third quarter heading into the holiday shopping season.
But sales were down 5.2%.
“The reality is that the sales are still declining and so far, Kingsbury has not been able to turn that around,” Swartz said. “And the profitability is still not great.”
In an effort to boost sales, Kohl's is putting extra emphasis on gifting and impulse buys.
“We want Kohl’s to become a gifting destination,” Kingsbury said. “This holiday season, we have significantly expanded our gifting section at the front of the store and 50% of the gifting assortment is new this year.”
In November, Kohl’s opened a new store in the downtown Milwaukee area and initiated its Black Friday deals weeks before Black Friday.
“For the past 60 years we have called Milwaukee home and we are thrilled to be bringing Kohl’s to this community,” Kingsbury said at the Kohl’s ribbon cutting ceremony in November. “I grew up, right here in the Milwaukee area, and I started my retail career bagging groceries at Kohl’s food stores. So being able to open right here in downtown is an incredible honor.”
This article originally appeared on Milwaukee Journal Sentinel: First year with Kohl's' new CEO had store openings, layoffs, profits
