Kohl’s CEO goes to Levi’s

New York
CNN business

In an unexpected executive shuffle, Kohl’s CEO Michelle Gass is leaving the department store chain to become CEO-in-chief of Levi Strauss.

Kohl’s ( KSS ) has come under intense pressure from activist Wall Street investors in recent years. Activist groups have pushed Kohl’s ( KSS ) to expand its online business, sell its real estate or take the company private.

Department store chains like Kohl’s, Macy’s ( M ) and JCPenney are losing customers to discount clothing stores like Amazon ( AMZN ), Target ( TGT ) and TJ Maxx.

Gass has developed several strategies to turn around Kohl’s, such as a return program with Amazon, but the company has struggled this year.

On Tuesday, Kohl’s released its first results for the third quarter, showing that sales fell 6.9% from a year ago.

Still, losing Gass, a former Starbucks executive, is a blow to Kohl’s.

“He has also been responsible for guiding Kohl’s through the difficult times of the pandemic and implementing improvements,” said GlobalData Retail analyst Neil Saunders. “It’s fair to say that Gass has saved Kohl’s from further decline.”

Meanwhile, Levi ( LEVI ) has grown since its relaunch in 2019.

The denim brand has benefited from people who dress casually for work and social events. It has also expanded into shirts, sweaters and other apparel and has attracted more women to its customer base.

Gass will join the company in January as president and take over as CEO within 18 months, replacing current CEO Chip Bergh, Levi’s said.

Kohl’s move to Levi’s is symbolic of a larger shift in the balance of power in retail.

Department stores were once the dominant force and clothing brands were obliged to reach customers. But department stores are no longer the only option, as brands can sell their goods directly to customers online, open their own stores or sell to a wide range of retailers.