The news: Kohl’s beat Q1 expectations, offering a rare bright spot amid its ongoing struggles. But following the recent firing of CEO Ashley Buchanan and lingering questions about its future, the company cautioned investors not to get ahead of themselves.

“It’s clear our actions are beginning to resonate with customers, and we’re building momentum in key areas,” said CFO Jill Timm. “However, this is a turnaround, and much of the work remains ahead.”

The strategy: Despite leadership instability, Kohl’s outlined a three-pronged turnaround plan:

1. Rebalancing the assortment: In recent years, Kohl’s leaned into trend-driven items to attract new customers, alienating core shoppers. The company is now working to restore balance across its merchandise mix. For example, Kohl’s reintroduced fine jewelry last fall, rolling out 200 in-store jewelry shops. That move helped boost Q1 jewelry sales by 10%, signaling early traction.
2. Emphasizing value and quality: Kohl’s aims to sharpen its value proposition through stronger promotions and expanded owned-brand offerings. It recently launched three home brands that target both affordability and quality, and it has begun to make more brands coupon-eligible to reinforce its image as a destination for deals.
3. Enhancing the in-store experience: A revamp of store layouts is intended to drive cross-shopping. For instance, Kohl’s created an accessory zone behind Sephora and moved the Juniors section nearby. These two categories over-index among Sephora customers, offering synergy opportunities. While the redesign is still in its infancy, the company said it is “very encouraged” by initial performance.

Our take: While the turnaround plan is strategically sound, execution won’t be easy. With many middle- and lower-income shoppers feeling economic pressure, Kohl’s bet on value may not stick if those consumers stick to the essentials.

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