Kohl’s Corporation put a ring on it today. The Menomonee Falls, Wisc. retailer said Tom Kingsbury, who has been serving as interim CEO since embattled CEO Michelle Gass, stepped down in November to join Levi’s as president, today was named permanent CEO.
“Tom’s exceptional track record growing retail businesses and his deep knowledge of Kohl’s makes him the right choice for Kohl’s next CEO. Since joining the Board, Tom has added valuable insight and perspective, and as interim CEO, he has demonstrated strong leadership and made a meaningful and positive impact on the organization,” said board chair Peter Boneparth. “The board has the full confidence in Tom’s ability to drive the business forward, focusing on accelerating sales and profitability, and we look forward to our continued work together.”
“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,” said Kingsbury. “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. I look forward to partnering with the board and leadership team to build on our strengths and deliver on our strategy for our shareholders and other stakeholders.”
Kingsbury has worked in the retail industry for over 40 years, serving in executive leadership and board roles at Kohl’s, Burlington Stores
Macellum, a long term holder of nearly 5% of the outstanding common shares of Kohl’s in October issued a letter to fellow shareholders about the need for “an immediate and targeted refresh” of the company’s board of directors, as opposed to waiting for a vote at next year’s annual shareholders meeting.
“Kohl’s is having one of the worst years in its long history,” the letter said. “Despite a challenging macroeconomic backdrop, Kohl’s results are the worst among its direct peers across almost every relevant measure.”
Macellum also called out the board for the termination of an unsolicited bid for Kohl’s, calling the sale process deeply flawed, as well as overseeing the departure of three key executive leaders and the downgrade of the company’s long-term credit rating to “junk” by S&P Global Ratings.
“We contend [the board] represents a “shadow board …. In our view, the shadow board is failing to adequately support Kohl’s senior management, which has resulted in the destruction of billions of dollars of shareholder value recently and perpetual stagnation over the long-term,” said the shareholder letter.
The decision to make Kingsbury’s role permanent seems to have the blessing of activist shareholder Macellum visors GP, LLC, which was critical of Gass and called for her resignation.
In connection with the Kingsbury announcement, Kohl’s said the company has entered into a “cooperation agreement with Macellum and certain of its affiliates, pursuant to which Macellum has agreed to multi-year standstill, voting and other provisions.”
Michael Bender, independent director and chair of the Kohl’s board’s nominating and ESG committee, said, “The board appreciates our constructive dialogue with Macellum during the last few months and their engagement as we conducted the CEO search process. We look forward to their continued support and partnership.”
Managing member of Macellum, Jonathan Duskin, said, “We’re very excited about the future of Kohl’s under the leadership of Tom and have the utmost confidence in his ability to maximize shareholder value.”
It’s unclear when the board soured on Gass, who set out to make Kohl’s the most trusted retailer of choice for the active and casual lifestyle.
With more than 1,100 stores in 49 states , Kohls.com and the Kohl’s App, the retailer offers national and exclusive brands at savings for families nationwide. Gass launched some out-of-the-box initiatives such as partnering with Amazon
The company credited Amazon with helping push foot traffic to its stores, and Gass said that it added at least 2 million customers in 2020 thanks to the Amazon partnership.
Gass’s most recent innovation was installing Sephora in-store shops in Kohl’s stores, which also promised to drive footfall and bring new customers to both Kohl’s and Sephora. Gass also doubled down on Kohl’s off-mall locations, saying the retailer is shielded from the vagaries of the shopping center industry, which has been in decline for years.
With the announcement of Gass’s appointment, the Levi’s board of directors put in motion a succession plan for Gass to succeed Bergh as CEO within the next 18 months.