Kohl's Corporation, one of the leading retailers based in southeast Wisconsin, has announced significant layoffs, cutting approximately 10% of its corporate workforce. This decision, which impacts less than 200 employees at its Menomonee Falls headquarters, is part of the company's strategic effort to improve profitability and streamline operations amid persistent challenges faced within the retail market.
This move follows Kohl's troubling financial performance, which revealed an 8.8% drop in net sales to $3.5 billion during the third quarter of 2024. The decline adds to concerns among shareholders and industry experts who have been watching the department store chain's struggles over recent years, particularly against the backdrop of fierce competition from other retailers and the growing dominance of e-commerce.
According to Jen Johnson, Senior Vice President of Corporate Communications at Kohl's, "Knowing the impact this has on our associates, we took this decision very seriously." The layoffs and recent closure of 27 underperforming stores across 15 states are intended to support the company's commitment to efficiency and long-term profitability.
Industry analyst Kalin Kolev of Marquette University notes the pressure Kohl's has been under, stating, "The company is struggling to deliver positive returns. Shareholders continue to request some sort of positive outcome." This layoff strategy, combined with the store closures, reflects the growing urgency for the company to make significant changes quickly.
With approximately 4,000 employees based at the corporate headquarters, the decision means impacting many lives, even as the company has stressed some of these layoffs result from unfilled positions. A Kohl's spokesperson clarified to Fortune, "The number of layoffs was at less than 200 because some of the layoffs were for unfilled jobs." Affected employees are being offered severance packages as the company navigates this transition.
The cuts come at a time when Kohl's is also dealing with leadership changes. Earlier this month, the company announced the impending departure of CEO Tom Kingsbury and the appointment of Ashley Buchanan, former CEO of craft retailer Michaels. During his tenure, Kingsbury acknowledged some missteps, particularly concerning inventory management decisions and the scaling back of core product categories. "We thought, ‘We can do more with a lot less,’ and [that] didn’t work out for us," Kingsbury admitted during December's earnings call.
Under Buchanan’s leadership, which officially began on January 15, 2025, the future direction of Kohl's will likely focus on revitalizing its product offerings and enhancing the overall shopping experience by shifting resources toward more profitable operations and innovative marketing strategies. Buchanan emphasized, "This will not happen overnight," as the company works to balance cost reductions with significant investments necessary for sustained growth.
Experts indicate the weight of these organizational changes cannot be overstated. With the retail environment rapidly shifting, as noted by Justin Grooms, CEO of checkout technology company Bolt, "The once-mighty titans of retail are faltering," referring to the industry’s precarious state. Nonetheless, he acknowledges it may be premature to write off department stores entirely.
Kohl's is not alone; many retailers are reassessing their models to remain competitive, prioritizing e-commerce developments amid shifting consumer behaviors. Analysts view the current adjustments at Kohl's as necessary steps but caution about potential risks of disruption during this transformation period.
Moving forward, Kohl's seeks to channel efforts toward enhancing its e-commerce presence, knowing this is now the primary driver of consumer engagement and sales. The company's strategic emphasis on digital channels aims to capture the growing segment of online shoppers who have become pivotal players during the COVID-19 pandemic and beyond.
Despite the steep challenges, Johnson reiterated the company's commitment to maintaining customer service standards during this transition, asserting, “Our goal is not only to stabilize our operations but also enrich the shopping experience for our valued customers.”
While these corporate changes are challenging for the employees and the organization alike, they reflect the broader narrative across the retail sector—a sector grappling with dramatic shifts caused by technological advancements, economic fluctuations, and changing consumer preferences. Industry watchers will be closely monitoring Kohl's next moves as the company makes its transition toward creating a more sustainable operational model for the future.