Kohl’s has fired its newly installed CEO, who has spent less than five months in the position, after the retailer found that Ashley Buchanan engaged in unethical behavior.
Buchanan’s dismissal was “for cause,” a rare rebuke of a business leader that carries serious weight in the business community. It comes after an investigation from an outside counsel found that he “violated company policies by directing the company to engage in vendor transactions that involved undisclosed conflicts of interest,” according to a press release.
Kohl’s added that his termination is “unrelated to the company’s performance, financial reporting, results of operations and did not involve any other company personnel.”
Buchanan, a former chief executive of arts and crafts chain Michaels, began as Kohl’s CEO on January 15 with the hopes of turning around the struggling retailer. But during his short tenure, he failed to do that with sales falling as much as 4.3% the company revealed in preliminary earnings.
Michael Bender, the current chairman of the Kohl’s board, will become interim CEO until a replacement is found. The news sent Kohl’s (KSS) shares soaring as much 8% in trading.
Buchanan’s departure is a “distraction that the company does not need and can ill afford,” Neil Saunders, managing director of GlobalData Retail, said in a note.
“While the sacking is not related to performance, it gives the impression that Kohl’s is in perpetual state of chaos and it raises some questions about the due diligence over his appointment,” he said, adding that it’s a “blow upon a bruise” for the company.
Like many department stores in recent years, Kohl’s has spent the last few years in turmoil and has struggled to recover from shifting consumer behavior. It’s also dealing with competition from online sellers, high inflation and, now, the pullback of consumer spending amid economic uncertainty.
Kohl’s also recently announced the closure of 27 locations, resulting in about 1,100 stores left.