Kohl's Governance Crisis: A Leadership Shake-Up and Its Market Implications

Kohl’s Department Stores has long been a bellwether for the U.S. retail sector, but its recent governance turmoil has drawn stark comparisons to the downfall of once-reliable retailers like Sears. Over the past two years, a series of high-profile director resignations and strategic disputes have roiled the company’s leadership, culminating in a dramatic May 2025 shakeup that both rattled and then reassured investors. The saga underscores the fragility of retail giants in an era of intensifying competition and shifting consumer preferences.

A Timeline of Turmoil

The crisis began in April 2023, when a senior director resigned over disagreements with the board about sustainability initiatives and long-term growth plans. The stock dropped 5% as investors questioned leadership stability. A year later, in March 2024, another director quit, opposing the board’s push for aggressive international expansion. This triggered a 3% decline, with analysts warning of overextension risks.

The most explosive chapter unfolded in May 2025, however. CEO Ashley Buchanan was terminated for cause after an investigation found he directed multimillion-dollar vendor contracts to a firm owned by his romantic partner, Chandra Holt. The deals, described as “highly unusual” and favoring the vendor, violated Kohl’s ethics policies. Buchanan forfeited $2.5 million in signing bonuses and equity awards.

Days later, board member Christine Day, a former Lululemon CEO, resigned, citing governance disputes over transparency and accountability. Her emails, later disclosed in an SEC filing, accused the board of fostering a culture of secrecy. Despite initial denials, Kohl’s eventually admitted her departure stemmed from these disagreements.

Market Reactions: Chaos and Catharsis

The May 2025 leadership changes initially seemed like a disaster—yet the stock surged 9.6% on the day of Buchanan’s ouster. Why the paradox?

• Relief over unethical leadership removal: Investors cheered the board’s decisive action against Buchanan, whose 106-day tenure saw Kohl’s stock plummet 47.2%—far worse than peers like TJX (-7.9%) or Ross Stores (-6.8%). By May 1, the stock had already rebounded 17.5% from its 30-year low of $6.13 on April 16.
• Better-than-expected financials: Kohl’s reported a narrowed Q1 loss of 20–24 cents per share (vs. a feared 54-cent loss) and a smaller-than-expected 4.3% comparable sales decline. These figures signaled operational resilience amid leadership turmoil.

The Risks Ahead

While the May rebound suggests investor optimism, long-term challenges remain:

1. Leadership vacuum: Interim CEO Michael Bender, a Walmart veteran, must stabilize operations while hunting for a permanent replacement. The search will likely focus on leaders with expertise in digital transformation and cost management—areas where Kohl’s has lagged.
2. Competitive pressures: Kohl’s struggles to compete with Walmart and Target’s omnichannel dominance. Its stock has dropped 51.1% since 2024, while the retail sector (SPDR S&P Retail ETF) rose 10.1%.
3. Reputation repair: The ethics scandal and governance disputes risk alienating institutional investors seeking stable governance.

Conclusion: A Turnaround on the Table?

Kohl’s May 2025 pivot—marked by a 9.6% stock surge—offers a glimmer of hope. The board’s swift action against Buchanan and transparency around Day’s resignation suggest a renewed commitment to accountability. Combined with improved financial guidance, these moves may have bought the company time to address deeper issues: a 30-year-low stock price, a 51.1% annual decline, and a 5-year comparable sales drop of 22%.

Yet success hinges on two critical factors:
- Strategic clarity: Can the new CEO balance cost-cutting with investments in digital infrastructure?
- Governance credibility: Will the board adopt reforms to prevent future conflicts, such as stricter ethics oversight or independent board committees?

For now, investors are cautiously optimistic. The stock’s rebound from a $6.13 low to $7.33 on May 2—a 19.6% jump—suggests markets are pricing in a chance at revival. But with Amazon and Walmart capturing 40% of U.S. e-commerce sales, Kohl’s fight for survival remains far from over.

In the retail sector, leadership stability and strategic agility are non-negotiable. For Kohl’s, May 2025 was a start—but execution will be the true test.