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The Ratings Game: What’s next for Kohl’s as CEO departs to join Levi’s?

In a week when its CEO Michelle Gass announced she is leaving to join Levi Strauss & Co., Kohl’s stock is up — but what’s next for the department-store chain?

Her departure, which was announced Tuesday, is seen as a loss for Kohl’s

and a win for Levi’s
according to at least one retail expert.

Gass has served as Kohl’s CEO since May 2018. She joined the company in 2013 as chief customer officer and became chief merchandising and customer officer in 2015.

Cowen analyst Oliver Chen says that Kohl’s should look for CEO candidates with branding and merchandising aptitude, particularly around products for women and young people. “Our take is that KSS needs to attract and retain younger customers, drive greater consistency in traffic and full price selling, continue to innovate and update the women’s apparel business, and drive lasting performance at very good partnerships (Sephora and Amazon),” he wrote in a note.

Also read: Kohl’s CEO Gass steps down to join Levi’s

The analyst firm has a market-perform rating and a $31 price target for Kohl’s.

During Gass’s tenure as CEO, Kohl’s strengthened its deal to accept Inc. 

returns in its stores and also clinched a partnership with Sephora.

However, the company is facing tightening consumer spending as well as pressure from activist investors to make changes to its board or confront another proxy fight. The company ended merger talks with Franchise Group Inc.

 in July.

On Tuesday, Kohl’s also announced an upbeat profit forecast, sending its stock higher. In a note released on Wednesday, UBS analyst Jay Sole said that the company’s CEO transition and third-quarter earnings upside should help its stock in the near term but not the long term. UBS has a sell rating for Kohl’s.

Now read: Kohl’s CEO loss is Levi Strauss’s gain, says retail expert

The retailer’s stock, which is down 40.6% this year, ended Thursday’s session up 8.6%. The S&P 500 Index
which has fallen 17% this year, closed up 5.5% on Thursday.

Of 17 analysts surveyed by FactSet, four have an overweight or buy rating, 10 have a hold rating and three have an underweight or sell rating for Kohl’s.

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