Michael Bender was the man of the moment.
A retail industry veteran, Bender took the top spot at Kohl's (KSS) as interim CEO when the battered department store chain announced on May 1 that it was going through “a transition process.”
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That process was sparked after Kohl's fired Bender's predecessor, Ashley Buchanan, after just four months on the job for violating company policies “by directing the company to engage in vendor transactions that involved undisclosed conflicts of interest.”
The company discovered “highly unusual” terms for a contract with a potential vendor and a multi-million dollar consulting contract. Both the vendor and consulting contract were related to a romantic partner of Buchanan's, according to The Wall Street Journal.
In addition to the leadership crisis, Kohl’s has been facing significant financial and operational problems, such as declining sales and inventory management issues.
Kohl's CEO: sales improved throughout quarter
And, unlike other department stores, which are commonly located within malls as anchors, Kohl's tends to operate standalone stores in strip malls, so they don't benefit from incidental foot traffic.
Bender, who had served as CEO of Eyemart Express, has also held senior roles at Walmart (WMT) and PepsiCo (PEP) .
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“Kohl’s has a strong foundation of more than 1,100 conveniently located stores nationwide, serving over 60 million customers,” Bender said when he was hired. “We will continue to build on this foundation as we enhance the value we deliver to our customers and set the stage for meaningful operational and financial progress.”
Kohl’s shares are up about 4% this year, but the Wisconsin-based company’s stock has tumbled nearly 26% from 2024.
The retailer beat Wall Street's second-quarter earnings second-quarter earnings on Aug. 27 and narrowed its full-year sales guidance toward the higher end of its range.
“Our entire team remains focused on enhancing the way we serve customers and over time returning the company to growth,” Bender told analysts during the company's earnings call.
“We saw our sales progressively improve throughout the quarter, with May having the softest performance due in part to colder, wetter weather over the last couple of weeks of the month, including the Memorial Day holiday, which negatively affected our spring seasonal businesses.”
TheStreet Pro's Stephen Guilfoyle said the “beleaguered retailer” is “executing at a higher level.”
“Profitability landed at levels better than expected and the firm was able to raise guidance,” the veteran trader said in his Aug. 27 column. “Better than feared? Yes, for those long Kohl's, the stock on Wednesday morning is in much better shape than feared.”
Guilfoyle, whose career dates back to the floor of the New York Stock Exchange in the 1980s, said net sales decreased 5.1% and comparable sales — sales from stores open for over a year — decreased by 4.2%.
Veteran trader praises Kohl's interim CEO
“That may sound lousy, but was considerably better than the -4.6% to -4.7% in comp sales that Wall Street had priced in,” he said and noted that “it is clear that management is making a disciplined effort to improve this balance sheet.”
When Kohl's announced Bender's appointment, the board expressed “full confidence in Michael to serve our customers and associates as Interim CEO”, but added that it had retained a leading executive search firm to find a permanent top executive.
Related: Kohl's basically pays customers to give it another chance
Guilfoyle rejected that idea with extreme prejudice and expressed strong support for Bender.
“After a long list of misfits that nearly ran this stock and company into the ground, this guy Bender is the first leader at this firm to actually oversee an improvement in profitability and balance sheet discipline at the same time, all while sales continue to slow,” he said.
“There is every reason to invest in this stock if the word ‘interim' is removed from Bender's title,” Guilfoyle added. “Should the firm go and hire another chief executive from the produce aisle of the local grocery store, then forget it.”
Several investment firms issued research reports after the company posted quarterly results, including Gordon Haskett upgraded Kohl's to Accumulate from Hold with a price target of $18, up from $12, according to The Fly.
The firm, which notes it had previously grown more constructive on the near-and-medium-term outlook for Kohl's, said that the results and upwardly revised FY25 guidance supports its more optimistic view.
As for Guilfoyle, his optimism for the company begins and ends with Michael Bender.
“Kohl's with this CEO in place, is worthy of investment,” he said. “It is not investable with anyone else at the helm and it is certainly not worthy of being chased. Let the shorts run out of ammo first. Rock on.”
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