It was a tough week to be at the top in retail with a number of companies announcing CEO switch-ups following disappointing performances, including Petco, Under Armour, Fossil Group and, as Retail TouchPoints previously reported, Allbirds.
Former Best Buy COO to Lead Petco While CEO Search Gets Underway
Ron Coughlin — who led Petco through a major strategic transformation over the last five years, including its IPO — has stepped down as the company’s CEO, Chairman and member of the board of directors. Michael Mohan, who has been a member of Petco’s board since March 2021 and previously served as President and COO of Best Buy, will take over as interim CEO while the search for a permanent replacement begins. Coughlin will remain on as an advisor to the board throughout the transition.
Petco reported a net loss of $22.6 million in its fiscal Q4, which ended Feb. 3, 2024, compared to net income of $32.7 million in the same quarter the previous year. Sales rose in Q4 to $1.67 billion, up about 6% from the previous year, but it wasn’t enough to assuage investors who have grown impatient with the company’s declining market cap despite its relatively consistent sales growth. Petco’s stock is down approximately 19% year to date.
“Petco is a powerful brand with an unparalleled offering that meets every need for pets, providing necessary products and services for these family members each day to support their health and wellness,” said Mohan in a statement. “I have a deep belief in our purpose, and I look forward to working with the leadership team and our partners to continue strengthening our business, driving profitability through operational discipline and execution that will improve growth, drive margin and generate cash to create shareholder value. My focus will be on our people, our operations and our customer experience, working together to advance our strategy.”
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“Mike’s highly successful track record across multiple segments of the retail industry, deep knowledge of Petco and strong operational skills make him the ideal executive to ensure a seamless transition as Petco moves forward,” said Cameron Breitner, member of the Petco board of directors in a statement.
Founder Kevin Plank Returns to Lead Under Armour
Kevin Plank will return to Under Armour as the company’s President and CEO, effective April 1, 2024. Current President and CEO Stephanie Linnartz, who took the helm a little over a year ago, will be stepping down from the role and as a member of the board.
This will be the third CEO switch-up at the company in nearly as many years. A veteran of Marriott International, Linnartz took over the role from former Aldo Group CEO Patrik Frisk, who replaced Plank in January 2020 but resigned a little over two years later.
During her short tenure, Linnartz focused on overhauling Under Amour’s C-suite and introduced its first-ever loyalty program. But those changes weren’t enough overcome the larger forces pressuring the company: sales slowed during the holiday quarter as the company grappled with soft demand in North America and sluggish wholesale orders.
Plank founded Under Armour in 1996 and served as CEO and Chair of the board from 1996 to 2019. He has been Executive Chair and Brand Chief since leaving the CEO role but will now step down from that position while still retaining a director seat on the board. In his place, Dr. Mohamed El-Erian will become the non-executive Chair of the board.
“For nearly 30 years, Under Armour has focused on inspiring athletes with industry-leading performance solutions they never knew they needed, and once they’ve tried them, can’t imagine living without,” said Plank in a statement. “As the company continues to navigate several post-pandemic consumer, industry and brand-specific factors, we are working hard to reconstitute our strengths and make thoughtful, balanced business decisions to drive enduring success for athletes, customers and shareholders. I am energized about the team we have put into place and look forward to seizing the opportunities ahead.”
Wall Street seems to be less enthused about the company’s future, however, with shares of Under Armour plunging on the news of Plank’s return to the helm. Evercore ISI has downgraded the company and said Plank’s return was a “clear signal” that the current strategy wasn’t working.
Retail analyst and GlobalData Managing Director Neil Saunders told CNBC that the leadership shifts are “emblematic of a brand that can’t quite decide which direction it wants to go in.”
Long-Time Fossil CEO Out Amid Activist Investor Pressure
Kosta Kartsotis, who has led Fossil Group for nearly 25 years, is stepping down as CEO and member of the board of directors, effective immediately. Kartsotis will remain with the company until September 2024 while a permanent replacement is sought; in the meantime, current EVP and COO Jeffrey Boyer will lead the company as interim CEO.
In February, activist investor the Buxton Helmsley Group (BHG) called for a shakeup at the company, with a BHG representative saying at the time that “given the board’s abysmal judgement and failure to oversee management for years, the need for immediate change at Fossil is abundantly clear.”
Fossil narrowed its losses in its Q4, but revenue fell and the company said it expected sales to decline between 12% and 17% in the current quarter. Shares of the company initially jumped as much as 9% on the news of Kartsotis stepping down but have since returned to previous levels.
Interim CEO Boyer has over 30 years of experience in retail and has played a key role in implementing the company’s Transform and Grow (TAG) transformation plan. Prior to becoming COO, he served as CFO and Treasurer for four years and was a member of the board of directors for 10 years before that. Boyer also has held leadership positions at Pier 1 Imports, Tuesday Morning, 24 Hour Fitness and Michaels.
Kevin Mansell, lead independent director of the board, has been appointed Chairman, effective immediately. Mansell has over 40 years of retail industry experience, most recently serving as Chairman, CEO and President of Kohl’s until his retirement in May 2018.
“On behalf of the entire board, I thank Kosta for his unwavering commitment and leadership to Fossil,” said Mansell in a statement. “We have great confidence in Jeff to guide the company through this period of transition as we undergo a strategic review, continue to advance our Transform and Grow Plan and pursue our search for the company’s next CEO in our effort to create long-term value for our stockholders.”
