Kohl’s is a mess in more ways than one

The department store chain on Thursday presented a gloomy outlook for 2022, saying it expects full-year sales to fall 5% to 6% compared with a year ago, and blamed high inflation for preventing shoppers – especially middle-income consumers – from spending more in their stores. The company also reported a drop in sales and profit for the quarter ended July 30.

Kohl’s shares fell more than 7% on Thursday.

But the economy is not the only problem. Kohl’s, (KSS) similar to other major chains included Goal (TGT) and Walmart (WMT), is stuck with a lot of excess inventory that it can̵[ads1]7;t clear out. The chain’s inventory in the quarter was 48% above where it was at the same time last year.

“We have adjusted our plans, implemented actions to reduce inventory and lower expenses to account for a softer demand outlook,” Kohl’s CEO Michelle Gass said in a statement.

Unsteady course

With more than 1,100 American stores and about $19 billion in annual sales, Kohl’s is the largest department store chain in the United States. But the company has struggled to find a way forward for itself.

Kohl’s floated and then withdrew the idea of ​​selling itself to Franchise Group (FRG), a holding company that owns The Vitamin Shoppe and other retail brands.
The retailer is trying a variety of tactics to stay relevant, especially to younger consumers. It recently partnered with popular cosmetics brand Sephora to open its mini Sephora stores. Kohl’s said the move has helped it gain a million new customers since last August, who are younger, more diverse and shop more frequently than the average consumer.

And last week, the retailer announced it was rolling out a self-pickup option in all its stores for online orders within a two-hour window.

But all these efforts, while necessary for Kohl’s, cannot fully camouflage the chain’s most fundamental problem, said Neil Saunders, retail analyst and CEO of GlobalData Retail.

“In our view, the main source of Kohl’s woes is internal. Most notably, the company has lost its act in merchandising and assortment planning and appears to have a seemingly haphazard approach to buying. The result is a jumble of disjointed products in stores, exacerbated by a very serious deterioration in store management standards,” Saunders said in a note Thursday.

“It used to be that, while a little uninspiring, Kohl’s was disciplined and neat in its presentation. Over the last year, that all went out the window,” Saunders said. “In this type of economic environment, consumers will quickly abandon purchases and stores that require too much effort for too little reward.”

Katherine Miklosik, who lives in the Toronto area, said she has shopped at the department store chain for decades and is such a dedicated Kohl’s fan that when she travels to the United States, she carries her Kohl’s card and Kohl’s discount coupons.

“I usually spend several hundred dollars at the store every trip,” she said. “As a cross-border shopper, I like to get clothes in the US that are different from stores here. [Kohl’s] The sales are amazing and until recently there was such a wide range of options for clothing, bags, homewares and seasonal decor.”

But her most recent trip, on August 13, to a Kohl’s in Watertown, NY, was a disappointment. Miklosik said she left the store “in a near panic attack from the mess and chaos.”

“On this visit, I spent $12.10 on a reusable shopping bag with the Kohl’s logo, and two stuffed animals with proceeds going to the Kohl’s Cares Foundation,” she said. “I even told the cashier that I was so overwhelmed I had to leave and that I might try again the next day. I didn’t.”

Source link

Back to top button