Michelle Gass, CEO of struggling department store chain Kohl’s, will step down from her role early next month to become the president of denim giant Levi Strauss.
Levi’s said in a release that Gass will start on Jan. 2, and the board of directors has put in motion a succession plan for her to succeed Chip Bergh as president and CEO in the next 18 months. She is expected to join the board of directors on that date.
Kohl’s said in a separate release that Gass plans to step down on Dec. 2 and Tom Kingsbury will serve as interim CEO.
Shares of Kohl’s gained 8%, while shares of Levi’s lost 1%.
The moves, announced Tuesday, come as Kohl’s have been under pressure by activist investors to shake up management amid weak sales.
Kohl’s announced preliminary figures for its third-quarter period. It said that same-store sales will be down 6.9%, while net sales will be down 7.2% compared to the year-ago period. The company is expected to release its results on Nov. 17.
Kohl’s struggled with anemic sales before the pandemic. Sales and profits rebounded in 2021, but the department store is now battling higher costs and a pullback from its price-conscious shoppers who are being more cautious with their spending in the face of rising prices for gas, food, and just about everything else.
In July, Kohl’s called off buyout talks with Franchise Group, the owner of Vitamin Shoppe, citing economic conditions.
In August, the Menomonee, Wis., chain slashed its sales and profit expectations for the year after being forced to cut prices to shed unwanted merchandise. The department store also cut back on orders ahead of the critical holiday period.
“It is unsurprising that Michelle Gass is to relinquish her role as CEO,” said Neil Saunders, managing director at GlobalData Retail, in a report published on Tuesday. “This will be seen as a sacrificial offering to investors, who have long pushed for widespread change in the management suite.”
But Saunders said that despite presiding over sales declines, Gass did improve fashion assortments and helped oversee a partnership with Sephora, which is rolling out shops at Kohl’s stores. She also oversaw the partnership with Amazon where customers can return items purchased at the online retailer at its store locations. So he believes her legacy should be “viewed favorably.”
Saunders, however, added that Kohl’s needs to find a permanent replacement as quick as possible as retailers face a challenging year.
[Written in collaboration with other media outlets with information from the following sources]
