Kohl’s Is Getting A New CEO

September 26, 2017, 2:51 PM UTC

Kohl’s CEO Kevin Mansell is stepping down next year, ending a 10-year run at the helm of a retailer he helped turned into a behemoth but that has struggled of late.

The company said on Tuesday that Mansell would step down in May and be replaced by Kohl’s chief merchant and chief customer officer Michelle Gass, a former Starbucks (SBUX) executive who joined the company in 2013. Kohl’s also announced that its operations chief Sona Chawla, a former Walgreens executive, would become president, meaning that the two top executives at one of the country’s largest retailers will soon be women.

Mansell joined Kohl’s in 1982, when it was a small regional chain serving the Milwaukee area, and was instrumental in building it up into the major national retailer it is now, with nearly $19 billion in annual sales. Kohl’s stole an enormous amount of market share from the likes of J.C. Penney (JCP) in the 2000s as it opened stores away from malls to be closer to shoppers, and it won legions of shoppers with popular, affordable brands, good customer service and neat, well laid-out stores. Kohl’s grew from 79 stores in 1992, when it became a publicly traded company, to nearly 1,150 two decades later.

But more recently, Kohl’s has struggled with sales stagnation. It was slow to enter crucial categories like beauty, and while it is now a $3 billion a year online retailer, Kohl’s was initially behind rivals like Macy’s (M) in equipping stores to support e-commerce by service as supplemental distribution and order pick up centers. What’s more, Kohl’s made too large a bet on its own brands, some of which grew stale over time, and in the last two years has re-calibrated its mix in favor of national brands even as it has sought to revitalize house brands like Sonoma.

After years of following a tried and true approach, Kohl’s has gotten bolder of late. It is remodeling hundreds of stores to make them smaller. And it recently announced initiatives with Amazon.com (AMZN), for which it will handle returns at some stores and provide selling space for its online rival’s products, a move some analysts see as fraught with risk. But it’s the the kind of aggressive, “unusual” move to use Mansell’s word, he wants to see continue on Gass’ watch.

“Let’s just accept the fact that our biggest challenge and priority is solving the (shopper) traffic problem- it became clear to us that we’ve got to think outside the box,” Mansell told Fortune in an interview after his retirement was announced. “What could we provide that would make a customer to choose one more trip to Kohl’s versus a trip to a competitor.”

Courtesy Kohl’s
Courtesy Kohl's

Gass was poached from Starbucks (SBUX) in 2013, coveted for her marketing prowess at the coffee giant, where she was key to creating of its loyalty program and industry-leading mobile app among other projects in her 17 years there. At Kohl’s, Gass landed big coups like adding Apple (AAPL) and Under Armour (UAA) products to its stores, as well as the Amazon.com (AMZN) partnerships. Gass has appeared on Fortune’s Most Powerful Women list in the past and in 2016 appeared in the ‘on our radar’ section highlighting women to watch.

As for Chawla, she joined Kohl’s in 2015, when the company stated both executives were in the running to eventually become CEO, a search that will culminate in the change in the c-suite next year. Mansell said he took great pride in the orderly nature of the transition, which has been in the works for years..

Both executives will have a tall order. They will need to go beyond protecting Kohl’s profitability and bring back growth to a retailer that was once the hottest story in retail, with numbers akin to what the likes of Ulta Beauty and T.J. Maxx are posting. Kohl’s annual revenues have hovered around $19 billion for seven years now, give or take a couple of percentage points, after doubling between 2003 and 2011.

“We have to take risks,” Mansell says. “We’re not done with out-of-the-box ideas.”

Read More

Great ResignationInflationSupply ChainsLeadership