Kohl’s announced the termination of its CEO, Ashley Buchanan, following an investigation that revealed he instructed the company to engage in transactions with vendors, creating undisclosed conflicts of interest.
Michael Bender, the Chairman, has been appointed as interim CEO, effective immediately. As a result of this appointment, Bender will resign from his positions on the board’s audit, compensation, nominating, and environmental, social, and governance committees, as stated in the retailer’s regulatory filing.
This announcement arrives less than four months after Buchanan, previously CEO of Michaels, assumed the role on January 15. Buchanan’s appointment marks the third CEO change for Kohl’s in as many years, as the department store struggles to boost lagging sales.
Kohl’s clarified on Thursday that Buchanan’s dismissal is not related to the company’s performance, financial reporting, operational results, or involvement of any other employees.
Kohl’s will begin the search for a permanent CEO and will announce a new chair in due course. The company was not immediately available for comment. Buchanan has not yet responded to a message sent to his LinkedIn account.
According to filings with the Securities and Exchange Commission, Buchanan’s termination stems from an investigation conducted by external legal counsel and overseen by the board’s audit committee. The investigation found that Buchanan directed Kohl’s to conduct business with a vendor founded by someone with whom he had a personal connection, under “highly unusual terms favorable to the vendor.” He also caused Kohl’s to enter into a multimillion-dollar consulting agreement with the same individual, who was part of the consulting team.
The investigation also revealed that Buchanan failed to disclose this relationship in either instance, violating Kohl’s code of ethics.
In connection with his termination, Buchanan will forfeit all equity awards he received from the company, including recruitment awards granted on January 15, according to the filing. He will also be required to reimburse Kohl’s for a pro rata portion of his signing incentive, amounting to $2.5 million, as per the documents.
Due to Buchanan’s termination, the board has decided to withdraw his nomination for election as a director of the company at the upcoming annual shareholders’ meeting on May 14.
Buchanan succeeded Tom Kingsbury, who remained as an advisor and will continue to hold his position on Kohl’s board until his retirement next month. Kingsbury served as Kohl’s interim CEO in December 2022 and was appointed permanent CEO in February 2023.
The firing occurs as Kohl’s, which operates 1,600 stores nationwide, grapples with declining sales. Its middle-income shoppers have reduced discretionary spending due to persistently high prices for essential goods. Kohl’s also faces strong competition from Walmart and Amazon, which have been enhancing their affordable fashion offerings.
Like other retailers, Kohl’s is also dealing with uncertainty surrounding President Donald Trump’s broad tariffs.
On Thursday, Kohl’s provided a preliminary outlook on sales and profits for the current quarter, indicating continued weakness, although the expected results are on track to surpass Wall Street estimates. The company anticipates reporting a decrease in comparable sales—from established physical stores and online channels—in the range of 4.3% to 4%, and a loss of 24 cents to 20 cents per share for the fiscal first quarter.
Analysts had projected a loss of 54 cents per share and a 6.4% drop in comparable sales, according to FactSet.
The company plans to release its final fiscal first-quarter results on May 29.
Shares of the company, headquartered in Menomonee Falls, Wisconsin, increased by nearly 9% in late morning trading.