Kohl's Drops As Long-Time CEO Kevin Mansell Announces Retirement Plans
Shares of Kohl's (KSS) dropped in morning trading after the retailer announced that its long-time CEO will retire next year and be succeeded by its Chief Merchandising and Customer Officer.
CEO SUCCESSION: Kohl's said in a statement this morning that Kevin Mansell, who has been with the company for 35 years and served as CEO for nearly 10 years, will retire as CEO and president in May 2018 at the close of its annual shareholders meeting. Chief Merchandising and Customer Officer Michelle Gass will take on CEO role when Mansell retires, Kohl's said. Gass, who joined Kohl's in 2013 as Chief Customer Officer, previously spent 17 years working at Starbucks (SBUX). Sona Chawla, Kohl's chief operating officer, will serve as the retailer's president. Chawla will maintain her responsibilities for the company's omnichannel operations including all store operations, logistics and supply chain network, information and digital technology, and e-commerce strategy, planning and operations. Additionally, the board plans to appoint one of its current independent members as chairman effective upon Mansell's retirement, Kohl's said.
WHAT'S NOTABLE: During his tenure as CEO, Mansell navigated the company through a financial recession and grew the retailer's e-commerce business to $3B. "I am energized by the challenges we are all facing today in the retail sector," Gass said in a statement. Kohl's is uniquely positioned through our strong store and omnichannel presence, our powerful brand portfolio and our differentiated value proposition. We are resilient, innovative and agile, and will continue to make investments in our business to provide compelling customer experiences that pave the path for our future success." Kohl's and other mall-based retailers and department stores have been hurt by the increasing popularity of fast-fashion retailers like Zara, Forever 21 and H&M, as well as an increase in online shopping on sites such as Amazon (AMZN). In its latest quarter, Kohl's reported declining comp sales, though its EPS and revenue narrowly beat estimates. Earlier this month, Kohl's said it will offer free Amazon returns in 82 stores starting in October. "This is a great example of how Kohl's and Amazon are leveraging each other's strengths," Richard Schepp, Kohl's Chief Administrative Officer, said. Kohl's previously announced plans to roll out a "smart home experience" in 10 stores across the Los Angeles and Chicago areas. Beginning in October, shoppers at these stories will be able to purchase Amazon devices, accessories and smart home devices and services directly from Amazon. Kohl's said 1,000-square-foot "zones" within its stores will be dedicated to Amazon products, including the Echo, Echo Dot, Fire TV and Fire tablets.
RECENT ANALYST COMMENTARY: Citi analyst Paul Lejuez, who last week raised his price target for Kohl's to $51, said the retailer's management is "thinking out of the box" with the Amazon partnerships.
PRICE ACTION: In morning trading, Kohl's dropped almost 1% to $45.85. Shares are down over 7% year-to-date.
OTHERS TO WATCH: Others in the space trading lower include Nordstrom (JWN) and Macy's (M), while J.C. Penney (JCP) and Sears (SHLD) are trading higher.