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Michelle Gass, embattled Kohl’s CEO said today that she will step down on December 2, as the retailer reported sales declines in preliminary third quarter earnings and sales results. Tom Kingsbury will serve as interim CEO.

Gass is leaving to join Levi Strauss & Co
LEVI
. in the new position of president, reporting to Chip Bergh, president and CEO. Gass will be responsible for leading the Levi’s brand and the company’s global digital and commercial operations. With the announcement, the board of directors has put in motion a succession plan for Gass to succeed Bergh as CEO within the next 18 months.

Kohl’s stock surged 6.80%, up $1.83 to $28.68 on the New York Stock Exchange in morning trading. Levi’s stock was down o.98% or $0.15 to $15.19.

Kohl’s board of directors named Kingsbury to serve as interim CEO until a permanent successor is chosen. The board also formed a committee led by Michael Bender and including Christine Day, Margaret Jenkins, Peter Boneparth and Tom Kingsbury, to spearhead the search for a new CEO.

Boneparth, who is chairman of the board, said, “The Board is grateful for Michelle’s many contributions since she joined the company in 2013. Under her leadership, the company has driven a strategic transformation, expanded its partnerships and brand portfolio, and supported an inclusive and collaborative culture. On behalf of all Kohl’s associates, we wish her well in her next endeavor.”

Gass joined Kohl’s in 2013. Her tenure at the retailer has been marked by innovation, including launching an Amazon
AMZN
returns service where consumers could return unwanted products. She also spearheaded a partnership with Sephora, which now is featured in 600 stores in in-store shops. Sephorah will roll out to 850 full-size stores next year and will ultimately have a presence in Kohl’s more than 1,100 stores.

Gass is also credited with reinventing the Kohl’s store fleet and growing the company’s digital business at a double-digit annual growth rate of more than $6 billion. She recast the store as a headquarters for the active and casual lifestyle with brands such as Champion and Under Armour
UAA
.

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Nonetheless, Gass was under pressure from activist investor Ancora Holdings, which pushed the board to oust her. Kohl’s had been in talks to sell to The Franchise Group
FRG
, which owns The Vitamin Shoppe, but a sale never materialized.

“Michelle’s deep retail and omni-channel experience combined with her track record of building brands and meaningful innovation is a perfect fit for the skills needed to lead this company for the long term and create significant value for our stakeholders,” said Bob Eckert, chairman of the Levi Strauss & Co. board of directors.

“I’m incredibly proud of what the team at Kohl’s has accomplished and I’m very confident in their ability to drive continued innovation, growth and value for customers,” Gass said. “Kohl’s associates and brand partners are an inspiration to me, and I am truly grateful to have had the opportunity to work with this great team and company.”

“Tom is highly regarded and perfectly equipped to take the role of interim CEO, and the board looks forward to working closely with him and the team to facilitate a smooth transition process and continuing to drive Kohl’s strategy,” said Bonaparthe.

Kohl’s released preliminary results for the third quarter 2022, including a 6.9% decreased in comparable store sales, and a net sales decrease of 7.2% compared to the prior year’s third quarter. The retailer said it had an operating margin of 4.7% and diluted earnings of 82 cents per share.

Kohl’s plans to release its full third quarter 2022 financial results on November 17. The company said that these preliminary results are not necessarily indicative of results to be expected for any future period, including the year ending January 28, 2023.

Kingsbury has been a Kohl’s director since 2021. He held leading positions at retailers including Burlington Stores, where he was president and CEO. He was also senior executive vice president of Kohl’s, president and CEO of The May Department Stores Company’s Filene’s division. He is director of Tractor Supply
TSCO
Company, BJ’s Wholesale Club Holdings, Inc. and Big Lots
BIG
, Inc.

“I’m proud and humbled to take the interim CEO role during such an important time for the company,” Kingsbury said. “Despite a challenging economic environment, Kohl’s is well positioned for long-term success with its unique off-mall store footprint, omnichannel presence, and loyal customer base.

“The Board and I are committed to the continued refresh and innovation strategy Kohl’s has begun, the cornerstone of which is the terrific partnership we have with Sephora,” Kingsbury added. “I firmly believe in the long-term potential of this company, our associates and our ability to deliver value for shareholders.”

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