Kohl's is making significant cuts to its corporate division, announcing layoffs affecting less than 200 employees as the retailer restructures following tough financial times. Located at its headquarters in Menomonee Falls, Wisconsin, the Fortune 500 company has faced mounting pressure, prompting these layoffs after it previously announced the closure of 27 stores across 15 states, which will be completed by April 2025.
Reports reveal Kohl's suffered an 8.8% decline in net sales during the third quarter of 2024, falling to $3.5 billion. With around 4,000 staff members at its corporate headquarters, estimates suggested the layoffs could impact up to 400 jobs; yet the company clarified the number of layoffs would amount to less than 200. Some of the losses involve unfilled positions, according to Kelley Johnson, SVP of corporate communications at Kohl's.
Despite the workforce reductions, Kohl's stated its mission to increase efficiency and drive profitability is aimed at benefiting its workforce and customers long-term. Johnson remarked, "Knowing the impact this has on our associates, we took this decision very seriously," reflecting the company’s intent behind these difficult choices, as reported by Fortune.
Underlining the challenges facing Kohl's was former CEO Tom Kingsbury, who recently stepped down, admitting to missteps during his tenure, including carrying less inventory, which proved counterproductive. During his call with Wall Street analysts, Kingsbury acknowledged, "We thought, ‘We can do more with a lot less,’ and it didn’t work out for us," recognizing his strategies underestimated consumer demand.
Following Kingsbury’s departure, former CEO of Michael's, Ashley Buchanan, took the helm. She emphasized her belief in the values and potential of the company, stating, "While I know this has been a challenging time for Kohl's, I also know this is a great company and a very strong brand,” as the Milwaukee Journal Sentinel reported. Buchanan is the third CEO of Kohl's since 2018, signaling the retailer's turbulent governance approach as it attempts to navigate through the turbulent waters of the retail sector.
These restructuring efforts come amid broader trends affecting traditional department stores, which are grappling with the rise of e-commerce, prompting some industry experts to proclaim the decline of once-stalwart storefronts. Justin Grooms, CEO of Bolt, remarked, “The once-mighty titans of retail are faltering,” as retailers struggle to adapt. Despite this, he noted, “to write off department stores entirely would be premature,” hinting at underlying resilience and adaptability potential within the sector.
For its part, Kohl's has begun to reintroduce previously popular offerings, including fine-jewelry selections and sizes adjusted for different demographics, after acknowledging previous inventory decisions may have hindered sales. The company maintains its profitable core store base, even as it evaluates its operational model to align with modern shopping trends.
Employees impacted by the layoffs will receive two weeks of pay, along with severance packages, and those affected by the store closures have options to apply for open roles across other Kohl’s locations. Such measures reflect Kohl's effort to maintain employee morale and support during difficult transitions.
Overall, as Kohl's undertakes these significant workforce reductions and changes, the focus now shifts to Buchanan’s leadership and her strategy for reinvigorated growth and sustainability. It's clear the challenges looming over department stores like Kohl's must be addressed with innovation and adaptability for the brand to thrive moving forward.