A day after Kohl’s Corp. announced its president and COO was gone, the company reported making $59 million in its third quarter, about the same amount as during the second quarter of the year. Sales decreased 5.2%.
“It’ll take some time for the full impact of our efforts to be realized,” Kohl’s CEO Tom Kingsbury said in comments to analysts after the report was released. Kingsbury took over as Kohl's CEO at the end of last year.
Digital sales were down 16.5% “and continue to be impacted, in part, by our decision to eliminate online only promotions in favor of omni-channel pricing across the enterprise.”
“While this has pressured our digital performance in 2023, it remains the right long-term strategy for our business,” Kingsbury said.
More:Kohl's Corp. enters 2023 with 'identity crisis' after rough 2022. What's next for the retailer?
In-store sales were down about 1% during the quarter.
Kohl's said unusually warm fall weather hurt sales. It was too warm in the fall to drive people to buy jackets and sweaters, according to the company.
Back to school sales were better than expected, Kingsbury said.
“However warmer weather during the later part of September and into October had a clear impact on demand for our fall seasonal goods, especially in-store,” Kingsbury said. “While I don’t like blaming weather for performance, the fall transition period has historically proven to be when Kohl’s apparel intensive business is most sensitive to weather fluctuations.”
Kingsbury said the weather in the Midwest, mid-Atlantic and northeast part of the country, contributed to stores in those areas seeing sales down in mid to low single digits, while stores in other parts of the country were up single digits.
This has caused Kohl’s to reconsider its offerings.
“We want Kohl’s to become a gifting destination,” Kingsbury said. “This holiday season, we have significantly expanded our gifting section at the front of the store and 50% of the gifting assortment is new this year.”
More:Kohl's Corp. opens downtown Milwaukee store and Black Friday deals are already in effect
Leadership structure changes
The departure of Dave Alves, now former president and COO of Kohl’s, surprised a lot of observers. The move came a few weeks after the board president Peter Boneparth announced he was not seeking re-election to the board.
Kingsbury was asked about the leadership changes and he said structure was put in place early in his tenure as CEO.
“I’ve been very, very involved in the move to re-establish our stores as a focal point of the company strategy,” Kingsbury said. “I felt that it was important to have the supply chain organization reporting directly to me.”
Kingsbury said there “will be no backfill" on the position previously held by Alves.
"Stores and supply chain will now report to me with other executive leaders assuming oversight of other functions, real estate, purchasing, risk management and strategy.”
“We are confident that we have the right leadership team going forward,” Kingsbury said. “Now that I’ve been on the job for a year, I understand what we need as a company and I decided to execute it.”
Final quarter crucial for Kohl’s
Heading into the holiday season the Menomonee Falls retailer is hoping shoppers notice some of the changes the company made to its product layout.
“In 2023 we had to re-establish our stores as a key focal point of our strategy,” Kingsbury said. “Our actions have included expanding our gifting assortment and repositioning it to front of store, simplifying our in-store signage and graphics, consolidating the customer checkout area, improving our overall merchandising while adding new categories and empowering our stores to capitalize on opportunities to drive sales in their local markets.”
The vulnerability caused by the weather has pushed Kohl’s to focus more on impulse buys at or near the cash registers, increase electronic products, gifts, beauty, pet products and home décor.
“We are repositioning Kohl’s. We are executing several strategic initiatives that will better position the company to drive improved sales and profitability growth over the long term,” Kingsbury said. “We remain in the early innings of our growth initiative. I’ve said many times, it takes time to build businesses.”
Kohl’s continues to be invested in Sephora, which has a presence in more than 900 stores. The company believes it can grow Sephora to a $2 billion business by 2025.
In the third quarter beauty sales increased more than 30% compared to the previous quarters.
“We attribute the improving trend to increased awareness and shopping frequency,” Kingsbury said.
The company also said 30% of Sephora shoppers are new to Kohl’s.
“Our stores really reflect a lot of the new strategies. Our home business is doing well in stores right now, obviously the beauty business is doing very well in stores right now,” Kingsbury said.
“A lot of the actions that we’ve taken will be behind us as we go into 2024. Again, I’m confident about the fact that we are doing well in stores. And I think it’s going to be a good set up for 2024.”
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November 22, 2023 at 01:25AM
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Kohl's Corp. reports making $59 million, new focus on holiday gifts - Milwaukee Journal Sentinel
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