Levi Strauss & Co. (LS&Co.) CEO Chip Bergh said that pressure from activist investors encouraged Kohl’s CEO Michelle Gass to take on her upcoming role as President and eventual CEO of LS&Co., according to CNBC. Firms have been pressuring Kohl’s to take measures that include spinning off its ecommerce business or selling itself, and while the executive team has focused on staying the course, the calls for more drastic action have not ceased.
“She’s been through the wars,” said Bergh in an interview with CNBC. “It’s one of the reasons we called her — and she wasn’t out looking. I think the activist situation, the fact that they struck with another letter back in mid to late September, kind of created the conditions for her to take a phone call.”
Kohl’s turnaround efforts have generated mild returns for the retailer — it expects a year-over-year comparable sales decline of 6.9% for the three-month period ended Oct 29, 2022 — but they have had a positive impact on the Levi’s brand, according to Bergh. Kohl’s most successful effort, its partnership with Sephora, has caused Levi’s sales to grow “at a faster clip” in stores with Sephora outlets.
“We’re already starting to see the impact of Sephora stores on our women’s business in Kohl’s,” said Bergh. “It’s definitely driving a new customer there.”
With Gass’ departure, Tom Kingsbury will take on the role of Interim CEO at Kohl’s — a move that could increase the chances that Kohl’s follows the demands of activist investors. Kingsbury, the former President of CEO of Burlington Stores, was appointed to Kohl’s Board of Directors in April 2021 as one of three directors added as concessions to activist investors’ demands for a boardroom shakeup.
“I’m proud and humbled to take the Interim CEO role during such an important time for the company,” said Kingsbury in a statement. “Despite a challenging economic environment, Kohl’s is well positioned for long-term success with its unique off-mall store footprint, omnichannel presence and loyal customer base. The Board and I are committed to the continued refresh and innovation strategy Kohl’s has begun, the cornerstone of which is the terrific partnership we have with Sephora. I firmly believe in the long-term potential of this company, our associates and our ability to deliver value for shareholders.”