Kohl’s Leadership Crisis: Can Interim CEO Steer the Retail Giant Back to Profitability?

Lead:
Kohl’s Corporation’s abrupt termination of CEO Ashley Buchanan on May 1, 2025, for orchestrating undisclosed vendor deals tied to a personal relationship, has ignited a firestorm of scrutiny over governance, financial performance, and leadership stability. The board’s swift response to the ethical breach sent shockwaves through retail circles, but investors now face a critical question: Can interim CEO Michael Bender salvage the company’s faltering trajectory before it’s too late?

The Governance Fallout: A CEO’s Missteps and the Board’s Response

The scandal at Kohl’s is more than a leadership shakeup—it’s a cautionary tale of ethical breaches at the highest levels. Buchanan, who took the helm in January 2025 with a $20 million compensation package, was fired “for cause” after failing to disclose his romantic relationship with Chandra Holt, CEO of Incredibrew, a vendor that secured multimillion-dollar consulting contracts with Kohl’s under “highly unusual terms.” An external investigation revealed the deals violated the company’s conflict-of-interest policies, prompting Buchanan to repay a pro-rata portion of his $2.5 million signing bonus and forfeit equity awards.

The board emphasized that the termination was unrelated to Kohl’s operational or financial struggles—a claim analysts are quick to challenge. “This isn’t just about ethics; it’s about poor decision-making that’s compounded existing problems,” said Neil Saunders of GlobalData Retail. “Kohl’s has been in a perpetual state of chaos for years, and this only amplifies investor skepticism.”

Financial Struggles: A Retail Giant in Decline

Beneath the governance crisis lies a deeper issue: Kohl’s ongoing battle to remain relevant in a competitive retail landscape. The company reported a 9.4% sales drop in Q4 2024 and an $80 million net income plunge, while its stock price had already fallen 50% since early 2024. The board’s preliminary Q1 2025 guidance paints a grim picture: comparable sales are projected to decline by 4.0%–4.3%, and the company faces its first quarterly loss in years, with diluted EPS expected to be negative between $0.20 and $0.24.

Store closures and workforce reductions further underscore the urgency. Kohl’s has shuttered 27 locations since February 2025, trimming its footprint to 1,100 stores, and cut its corporate workforce by 10%. Yet these moves, framed as cost-cutting, have done little to stem the tide. “Buchanan’s tenure was marked by misguided expansion and a disconnect from the company’s core customer,” noted Morningstar analyst David Swartz. “Now, investors are left wondering if Bender can pivot to a strategy that actually works.”

Bender’s Challenge: Can Interim Leadership Deliver?

Michael Bender, the board’s choice as interim CEO, brings decades of retail experience—from Walmart’s e-commerce division to Eyemart Express—but faces a daunting task. His mandate is clear: stabilize operations, rebuild investor confidence, and execute a turnaround plan while searching for a permanent successor.

Bender’s immediate priorities include addressing Kohl’s $40–$45 million operating income shortfall, improving supply chain efficiency, and curbing the impact of inflation and tariffs. “Bender’s track record in operational simplification is a positive sign,” said Baird analyst Mark Altschwager. “But he’ll need to act fast—tariffs and shifting consumer habits are squeezing margins, and the stock’s 7.5% bounce on the news is fragile.”

However, challenges loom. Kohl’s faces $1.8 billion in debt, and its reliance on value-conscious customers has made it vulnerable to competition from Walmart and Amazon. Analysts warn that without a sharp turnaround in sales trends or a strategic shift, the company may struggle to regain its footing.

Conclusion: A High-Stakes Gamble for Kohl’s

Kohl’s now stands at a crossroads. The board’s swift action on governance issues has temporarily calmed investor nerves, as evidenced by the stock’s post-announcement surge. Yet the real test lies ahead: Can Bender leverage his operational expertise to reverse declining sales, reduce costs, and rebuild trust?

The numbers are stark. To return to profitability, Kohl’s must reverse its sales slide and cut expenses aggressively. A renewed focus on its core strengths—its vast store network, omnichannel capabilities, and everyday-low-pricing model—could help, but only if paired with disciplined leadership and a clear vision.

Investors should watch closely for two key indicators:
1. Q1 2025 Earnings Report (May 29): Will sales and margins align with guidance, or is the decline accelerating?
2. Strategic Shifts: Will Bender pivot to cost-cutting, digital innovation, or a new store format to reconnect with customers?

In the retail sector, missteps are costly, and second chances are rare. For Kohl’s, the clock is ticking—and the stakes couldn’t be higher.