Kohl’s makes progress on turnaround as CFO provides C-suite stability

Following years of weak sales, the better-than-expected earnings come after a tumultuous period, my Fortune colleague Sydney Lake writes. CEO Ashley Buchanan was fired in May—just over 100 days into the role—after an investigation found he directed the company to do business with a vendor who was his romantic partner, under highly unusual terms favorable to the vendor. Former board chair Michael Bender is now serving as interim CEO while the company searches for a permanent replacement.

When Buchanan joined the company in January as chief executive, he succeeded Tom Kingsbury, who had followed Michelle Gass after she stepped down as CEO in December 2022 to become chief executive at Levi’s.

Working toward a turnaround

Timm has been with Kohl’s since 1999 and became finance chief in 2019, having previously held various finance leadership roles, including VP of financial planning and analysis and EVP of finance.

“As Timm has been around through multiple CEO changes, she provides stability at a company that has lacked it,” David Swartz, senior equity analyst at Morningstar, told me, though he added that a new CEO could insist on making executive changes.

Swartz also said Kohl’s needs a CEO with long-term vision and experience in retail and apparel. “It hasn’t really had this in years,” he said, emphasizing the need for a strategic plan for real estate and greater adaptability to competitive threats. “Obviously, the board and its search firm need to do a much better job than it did with Ashley Buchanan, which was a disaster,” he said.

Kohl’s outperformed Morningstar’s expectations on EPS, margin, and comparable sales, with shares still “very undervalued” versus Morningstar’s estimates of $40 fair value. Modest Q2 gains have not changed Swartz’s long-term forecast for 1% comparable sales growth and 5% operating margins.

Kohl’s turnaround centers on rebuilding proprietary brands, simplifying promotions, improving the omnichannel experience, and regaining its reputation for value and quality.

On the earnings call, Timm stressed Kohl’s continued focus on value: “We’re also navigating a lot of uncertainty in the macro environment, and we know our consumer, particularly the middle- and lower-income customer, remains under pressure, and so we’re going to have to fight for every dollar in the back half.”

Sheryl Estrada
sheryl.estrada@fortune.com

Leaderboard

Warner Bros. Discovery, Inc. (No. 114) has appointed Brad Singer CFO of Warner Bros., upon completion of the company’s planned separation, which is expected to occur by mid-2026. Gunnar Wiedenfels, CFO since 2022, will become CEO of global networks, the new company that will include cable channel businesses.

Big Deal

“The 3:30 a.m. club” is an interesting article by advisory firm Korn Ferry. It discusses how 15% of workers’ circadian rhythms, known as chronotypes, lead them to do their best work in the early morning hours.

According to Korn Ferry: “Some are extreme early risers, sometimes called ‘larks,’ who naturally wake up at 3 a.m. or even earlier, while others are still awake from the previous evening, not hitting the hay until 4 a.m. or 5 a.m. These larks and owls speak rapturously about the calm of night, when there are no ringing phones or crying kids or pressing errands, and they are able to do their best work.”

However, despite constituting more than one in ten workers, it’s a lifestyle at odds with corporate norms.

Going deeper

Fortune 500: Titans and Disruptors of Industry, a new vodcast hosted by Fortune’s Editor in Chief Alyson Shontell, made its debut this morning. Watch the first episode with Accenture CEO Julie Sweet here.

Overheard

—Wedbush Securities analysts wrote in an industry note on Wednesday evening. Nvidia beat Wall Street’s earnings expectations reporting $46.74 billion in revenue, a 56% year-over-year increase. However, with no sales of its H20 chips to China, the stock fell after the earnings call, Fortune reported.