A Kohl's Corp. store stands in Concord, California, U.S., on Tuesday, Feb. 24, 2015. Kohl's Corp. is expected to release earnings figures on Feb. 26. Photographer: David Paul Morris/Bloomberg via Getty Images
Kohl's needs to reinvent itself. Are Aldi and Amazon the key?
01:25 - Source: CNN Business
New York CNN Business  — 

In a surprise executive shuffle, Kohl’s chief executive Michelle Gass will leave the department store chain to become the CEO-in-waiting at Levi Strauss.

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

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

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

Michelle Gass is leaving Kohl's for Levi's.

On Tuesday, Kohl’s released its preliminary third quarter results showing that sales dropped 6.9% from a year ago.

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

“She has also been responsible for guiding Kohl’s through the challenging pandemic period and putting in place improvements,” said Neil Saunders, an analyst at GlobalData Retail. “It is fair to say that Gass has saved Kohl’s from more serious decline.”

Meanwhile, Levi (LEVI) has grown since it went public again in 2019.

The denim brand has benefited from people dressing more casually for work and social events. It has also expanded into shirts, sweatshirts and other apparel and drawn more women into its customer base.

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

Gass leaving Kohl’s for Levi’s is symbolic of a larger shift in retail’s power balance.

Big department stores were once a dominant force and clothing brands were beholden to them to reach customers. But department stores are no longer the only option, as brands can sell their merchandise to customers directly online, open their own stores, or sell to a wide array of smaller retailers.