Why Kohl’s CEO firing serves as a warning for C-suite executives

Good morning. Kohl's needs to appoint its fourth CEO in less than three years after its chief executive was ousted due to an ethics violation linked to a compromising personal relationship.

Ashley Buchanan began his tenure as CEO of Kohl’s on Jan. 15, 2025, most recently serving as chief executive of The Michaels Companies. Before that, he held a variety of senior executive roles at Walmart and Sam's Club. Buchanan's appointment at Kohl’s followed Tom Kingsbury, who was in the role for two years. Kingbury had succeeded Michelle Gass, who left Kohl’s to lead Levi’s.

Kohl’s Board chair Michael J. Bender said of Buchanan in January: "We know he will be a great leader for Kohl's and will bring a new perspective in our next chapter.”

On Thursday, the company announced Buchanan's firing.

Following an investigation conducted by outside counsel and overseen by the board’s audit committee, Kohl’s terminated Buchanan for cause, citing undisclosed conflicts of interest related to vendor transactions. The company stated in the announcement that his firing was unrelated to Kohl’s performance, financial reporting, or operational results.

Fortune’s Sydney Lake reported an SEC filing revealed Buchanan directed the company to conduct business with a vendor he had a personal relationship with under “highly unusual terms” that were favorable to the vendor. He also committed Kohl’s to a multimillion-dollar consulting agreement in which the same individual was part of the consulting team. Buchanan did not disclose his relationship as required under the company’s code of ethics.

The unusual deal involved a woman with whom he has had a romantic relationship, the Wall Street Journal reported.

A needed turnaround amid CEO turmoil

So what will become of Buchanan’s career? I asked Shawn Cole, president and founding partner of executive search firm Cowen Partners, for his assessment, and I think it serves as a warning for anyone in a C-suite role. “His career is effectively over,” Cole told me.

"This is a major embarrassment for Kohl’s, the board and shareholders," he said. "This situation underscores the importance of backchannel references; even minimal due diligence could have revealed any prior issues."

It’s also an embarrassment for the search firm that recommended Buchanan, Cole said. “I’m unclear if it is the same search firm continuing the new search, but this would certainly fall under the replacement guarantee,” he said.

Bender is now serving as interim CEO. He is a former president and CEO of Eyemart Express. Bender also previously served as COO of global eCommerce at Walmart.

In the backdrop of the scandal, Kohl’s (No. 235 on the Fortune 500) has reported 12 straight quarters of revenue declines. Its store brands haven't resonated with shoppers. For the other brands it sells, Kohl's competes with retailers such as Amazon, Target, Dick’s Sporting Goods, and Walmart. There have been recent store closings and layoffs.

Kohl’s CFO, Jill Timm, has been with the company since 1999, becoming finance chief in 2019. Over the years, she has served in several finance roles, such as VP of financial planning and analysis and EVP of finance. "Timm is clearly a highly qualified CFO and has done a commendable job maintaining the business despite declining sales," Cole said. But as for choosing the next CEO, Kohl's board will most likely select an external candidate to address a glaring issue—a deep disconnect with customers.

"Kohl’s doesn’t have a margin or efficiency problem—it has a revenue problem," he said. "What Kohl’s needs is a retail veteran with a background in marketing, operations, and turnarounds." The company needs a CEO who can rebuild trust through private label revitalization and frictionless shopping experiences.

Have a good weekend. See you on Monday.

Sheryl Estrada
sheryl.estrada@fortune.com

This story was originally featured on Fortune.com