Name: Kohl's CEO on activist investors, inflation and other challenges
Uploaded: 2022-10-28
Duration: 9 min 49 s
Description: Michelle Gass says even with the support of the troubled retailer's board 'I feel an urgency every single day' to perform. She adds, 'Our strategy and the green shoots are working.'

Michelle Gass says even with the support of the troubled retailer's board "I feel an urgency every single day" to perform. She adds, "Our strategy and the green shoots are working."

Kohl's CEO on activist investors, inflation and other challenges

Leadership

Michelle Gass says even with the support of the troubled retailer's board "I feel an urgency every single day" to perform.

Kohl's CEO on activist investors, inflation & challenges

Michelle Gass says even with the support of the troubled retailer's board "I feel an urgency every single day"

Michelle welcome and so good to see you to talk about cole's, you've been making a lot of changes. Unfortunately, your stock is not showing it down something like 50% so far this year and you've been getting a lot of pressure from a variety of activist investors. The good news is your company's board has unanimously endorsed you and they support you. So my question is, what's next? What is the most critical move you have to make at this point? The most critical move that we need to make is focused on the, which is exactly what we're doing. I mean, the team is heads down. We're navigating the current challenges, but we're also continuing to invest in the future. You mentioned the board endorsing and supporting their, supporting the management team. They're supporting the strategy and we're all in, you know, coles is resilient. We've navigated challenges like this before. This is in the short term, but in the long term I have great confidence and conviction that will come out the other side of the current challenges. We're facing the economy where the consumer is. But I look at our strategy and the green shoots and they're working has a board giving you a timetable saying this is the time you have the deadline to get the job done. And do you feel an urgency to perform? Absolutely. I feel an urgency every single day. We're making adjustments as we speak. Um, but you know, as I was saying, you know, the strategy Sephora, the new brands. We see the underlying green shoots of that working. We have this big head one right now, which is the consumer pullback and the pressure that the customer is facing. But you know, we'll get through this. So what do you think you need to do to show investors and your employees and customers that you have a strategy that works? I am fully expecting that over time. We will see these strategies played out. We started the year expecting, you know, bigger results candidly. But um we serve middle income consumers and they've been hard hit. And so we did see that pull back. We're going to grow this business. I have full conviction. I mean, we're like I said, we're transforming. We have brand new categories. Um, Sephora is a game changing partnership. Well, let's talk about that because I know you're banking a lot on this partnership with Sephora, you've already added 600 of these full sized cosmetic stores inside of kohl's. You're planning 250 more Sephora's next year. But can you afford to continue doing that given everything that you've just been talking about? Absolutely, Sephora is our future and a game changer for us. This is a very big deal for us and it hasn't really yet shown up in our results to date because we're just building them out. I think really importantly, susie, these stores, there are future. They manifest the future strategy and they're significantly outperforming the non Sephora doors. My conviction on the future of this company is very strong. It we just need all these strategies to take hold that were in the early days. So what about the rest of, of coals? I mean, what else are you doing to drive growth to get customers into your store? We are truly modernizing the coals customer and we were not your, we're not your grandmother's cold or your mother's calls anymore. You know, I have a big passion for innovation and thinking out of the box and thinking about new ways to bring customers in. So we introduced this amazon partnership a couple years ago, people are like, where did that come from? We're inviting a competitor in. Um but what we saw was a win win. We get traffic by customers, bringing in their returns into coles they got from amazon. And as you might imagine, there's lots of returns that come through amazon just because they're so big, they get a seamless experience. But that's driving traffic and it's bringing in a younger customer and what we're seeing. Suzy is a halo impact. So about half of our customers who are buying Sephora are buying other things in the store, which is really powerful and their repeat rate is coming up. One of the big ideas we had a couple of years ago, which was really to stand for the active business. We worked with the three powerhouse brands, Nike Adidas under armor that also brings in a younger customer casualization denim, I mean, we can lead across all these areas. So it's a combination of all these things that will really give us this separation and ultimately pivot from being a department store to really winning in the active and casual lifestyle. Well, I wanted to ask you about that because you told investors recently that kohl's is pivoting from a department store to a focused life concept. What do you mean by that? We want to be the place that you are going for your casual and active lifestyle because that's clear space for us. Nobody really owns that for the family. You can visit holes every day, get all your essentials, your jeans, your T shirts, your activewear. And it opens up category opportunities like beauty and that makes so much sense. Right? That's an essential Prada replenish herbal products. So those things coming together and it's the coming together of our products and brands and also the environment that we serve them in. Is this connected to also your strategy to open 100 smaller stores and also in smaller markets. What's the thinking behind that? Coal serves? America 80% of americans live within 15 miles of the coals. We no longer need The big 90,000 square foot store because of the digital component. Um, but we have, we believe cracked the code on how to do a smaller store. And um, we've been experimenting and uh, you know, now we're ready to ramp this up. So I'm very excited about that opportunity. You've been talking a lot about digital and coming into the stores. What do your customers favor stores or online? Our most loyal customers shop across both channels. And I think that's the beauty of being a true omni channel retailer and finding ways to bring those experiences together uh to win an omni channel, you have to be great at both. You have to offer ease and convenience while also Innovation Discovery and the customer is in charge. So you have to be there however they want to shop. I want to get your take on the economy and the american consumer, the ceo of Jpmorgan Jamie Diamond, who runs the biggest bank in the country. Said that quote, a very very very serious mix of headwinds is coming our way and he's predicting the U. S. Economy will tip into a recession. He gives a date 6 to 9 months middle of next year. Do you agree with that recession forecast? Is that what you're seeing from your customers? You know, we are seeing a lot of pressure on our customers. Um and it came on fast for us. Like I said, we started the year with much higher expectations because we have these great initiatives, great initiatives, they're still in play and they're still working and we're still investing in the good news is close, is a very healthy company to keep the long term going, but in the short term we are seeing a pullback. We've reset expectations with our investors. Um To say okay, you know this is at least for the balance of the year, how we see it. And we've adjusted our plans to candidly make sure that we can be more focused even more focused on value. We are a value retailer. But how do we amplify that? So as they are making choices coles comes top of the list. So if your customers are looking for value, they're looking for bargains. What is your thinking on this upcoming holiday season? What are you gonna do to make sure that they come to the cold stores? Are you gonna be offering special promotions? Are you gonna be cutting prices? What are you going to do? We're gonna be loud and proud about our value. Uh We're going to focus on our private brands which are phenomenal value. But at the same time Susie, it's really important to bring in newness because people still at holiday time, it's a really special time. They want to find that special gift. So they'll be able to discover that it cold but also at a great value. You have a lot of balls that you're juggling in the air and you know from a lot of the C. E. O. S. Who I interview they say the job of being Ceo has changed so much since the pandemic and how they lead, how they meet leadership expectations whether from their employees or customers, their investors, the public. What's been your experience, How has your job changed since the pandemic? Any one thing that we've navigated again the pandemic or supply chain wage pressure inflation. Um, in our case, you know, some activist activity, any one of those is quite challenging and you do them all simultaneous. For me, it's really honed. On the one hand, the strength, conviction, resilience, and courage. On the other hand, um, being an empathetic, present, understanding leader. And it's the combination of both of those things. You know, people want to follow, especially in times of uncertainty. Someone is clear and we know where the hell is going, but at the same time They want someone who can be, you know, meeting them where they are and understanding their issues and be empathetic to their situation. So it's you got to have both. There are many women who are gonna be watching this interview and I'm sure they admire your leadership and your 30 years in the retail industry, not just at Kohl's, but you spent many years at Starbucks. What is the best leadership advice that you can share with them be your true self. And as we're talking about women leadership, I have a 23 year old daughter and um, you know, I think now it's finally the time we don't have to fit in a stereotype, you know, the traditional leader, you know, leading from the ivory that's no longer. And I think the attributes of female leadership is really appropriate for this next chapter in business and for leadership. So it's listening. It's being empathetic and being, but really being yourself and not being locked into a mold of what others expect for you.