US retail giant Kohl’s fires CEO for directing millions to romantic partner

NEW YORK – Retail chain Kohl’s said it fired its chief executive just months into his tenure after the board uncovered that he directed millions of dollars of business to someone he has had a personal relationship with that was not disclosed.

The company said it is starting a search to find a permanent CEO replacement following the departure of Mr Ashley Buchanan, who came to Kohl’s in January from retailer Michaels. Chairman Michael Bender will serve as Kohl’s interim CEO, according to a statement.

Mr Buchanan’s business dealings were with a woman he has been romantically involved with, named Ms Chandra Holt, according to a person familiar with the matter.

The two served together as executives at Walmart’s discount chain Sam’s Club in the late 2010s.

Ms Holt then served brief stints as the CEO of retailers Bed Bath & Beyond and Conn’s. She is now a consultant and the founder of vitamin-seller Incredibrew. 

“I’ve known Ashley Buchanan for 10 years, but I have not received any compensation for my Incredibrew business from Kohl’s,” Ms Holt told Bloomberg News. 

Mr Buchanan’s relationship with Ms Holt was an open secret inside Walmart, their past employer and across the retailer’s hometown of Bentonville, Arkansas, according to people familiar with the matter. 

Three months ago, Ms Holt congratulated Mr Buchanan for his new role as CEO of Kohl’s in a public post on LinkedIn. Later, Mr Buchanan reposted a video on LinkedIn from Ms Holt promoting her Incredibrew products.

Mr Buchanan’s termination follows an outside investigation overseen by the board’s audit committee. 

The probe determined that Mr Buchanan “had directed that the company conduct business with a vendor founded by an individual with whom Mr Buchanan has a personal relationship on highly unusual terms favourable to the vendor”. 

He pushed the company to enter into a multi-million-dollar consulting agreement wherein the same individual was part of the consulting team, the board found.

Kohl’s said that in neither case did Mr Buchanan disclose this relationship as required under the company’s code of ethics.

The retailer said that Mr Buchanan’s termination is unrelated to the company’s performance and did not involve any other company personnel. He will also be required to reimburse the firm US$2.5 million (S$3.3 million) from his signing bonus, it said.

The CEO change will mark the company’s fourth chief executive since 2018. 

Kohl’s shares rose 8.4 per cent on May 1 as it reported better-than-expected preliminary first-quarter earnings, but the stock is still down roughly 70 per cent over the last year.

After Mr Buchanan took over as CEO in January, Kohl’s cut about 10 per cent of its corporate workforce to improve profitability. It is also closing underperforming stores. 

It is a “blow upon a bruise for the beleaguered department store chain”, Mr Neil Saunders, managing director at GlobalData, said in a research note.

While it is not related to performance, “it gives the impression that Kohl’s is in (a) perpetual state of chaos, and it raises some questions about the due diligence over his appointment”. 

Mr David Swartz, a senior equity analyst at Morningstar, said: “One small positive is that Kohl’s board moved decisively.” BLOOMBERG