• by Sarah Mahoney , Staff Writer @mahoney_sarah, November 26, 2024

 
Vanessa Hudgens is one of Kohl's celebrity holiday partners.

Kohl’s executives had braced investors for a sales decline in the fiscal third quarter, but the results -- a 9.3% sales tumble -- were far worse than expected. Net income also plummeted.

Kohl’s named Ashley Buchanan, currently Michael’s chief executive officer, as the new CEO. Buchanan has also held key roles at Sam’s Clubs and Walmart and replaces Tom Kingsbury, who is retiring on Jan. 15.

Kohl’s revenue fell to $3.5 billion from $3.84 billion in the fiscal third quarter of last year. Net income sank to $22 million, down from $59 million. The Menomonee Falls, Wisconsin-based company now expects full-year sales to decrease between 7% and 8%.

Calling the results “horrible” and “abysmal,” David Swartz, an analyst who follows Kohl’s and other retailers for Morningstar, writes that Kohl’s stock “plunged by a midteens percentage” after releasing the financial report.

“Although Kohl’s reported progress with its Sephora (beauty sales up 15%) and Babies R Us efforts, its core apparel, footwear, and home goods categories remained weak,” Swartz says. “Among other problems, the company blamed the sales shortfall on insufficient inventory of affordable private-label clothing.”

Kingsbury’s departure is not unexpected. He stepped into the CEO role on an interim basis in 2022, when then-CEO Michelle Gass decamped to lead Levi Strauss & Co. He agreed to accept the permanent position through May 2025, and will stay on in an advisory role through then.

“We had anticipated that Kingsbury was likely to retire sooner rather than later, but a leadership change during such a tumultuous period is not ideal,” Swartz says.
Traffic fell 3% in the quarter.

On a call webcast for investors, Kingsbury acknowledged the disappointing results stemmed from a series of missteps and added that performance has been improving through November.

“The holidays have always been an important time for Kohl’s,” he said, “and this year, we will deliver even more value with our extended gifting assortment. While we expect the holiday to be highly competitive, we are well positioned, from a product and marketing perspective, to improve our sales trend.”