Kohl’s is a mess in more ways than one
NEW YORK– Kohl’s can’t catch a break, and it has only itself to blame.
The department store chain on Thursday presented a bleak outlook for 2022, saying full-year sales will fall 5% to 6% from a year ago and blaming higher inflation for keeping shoppers — especially middle-income consumers — from spending more. in his shop. The company also reported a decline in sales and profit for the quarter ended July 30.
Shares of Kohl’s fell more than 7% on Thursday.
But the economy is not her only problem. Kohl’s ( KSS ), like other big chains like Target ( TGT ) and Walmart ( WMT ), is stuck with too much inventory that it can’t explain. The chain’s inventory in the quarter was up 48% from where it was at the same time last year.
“We have adjusted our plans, implemented actions to reduce inventory and lower costs for the perspective of reducing demand,” Kohl’s CEO Michel Gass said in a statement.
Unstable course
With more than 1,100 US stores and annual sales of about $19 billion, 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 considered and later withdrew the idea of selling it to Franchise Group (FRG), a holding company that owns Vitamin Shoppe and other retail brands.
The retailer is using various tactics to stay relevant, especially with younger consumers. It recently partnered with popular cosmetics brand Sephora to open mini-Sephora stores at their locations. Kohl’s said the move has helped it gain millions of 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 to all of its stores for online orders within a two-hour window.
But all these efforts, while necessary for Kohl’s, cannot fully mask the chain’s most fundamental problem, said Neil Saunders, retail analyst and managing director of Global Data Retail.
“In our view, the main source of Kohl’s problems is internal. Specifically, the company has lost the plot in terms of merchandising and range planning and appears to be taking a seemingly haphazard approach to purchasing. The result is a clutter of unrelated product. In-store, which is compounded by a serious breakdown in merchandising standards.” ,” Sanders said in a note Thursday.
“It used to be that, while a bit unhinged, Kohl’s presentation was disciplined and organized. All of that has gone out the window over the past year,” Saunders said. “In this type of economic climate, consumers will quickly abandon purchases and stores that require a lot of effort for very 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 devoted Kohl’s fan that she carries a Kohl’s card and Kohl’s discount coupons with her whenever she travels to the United States.
“I usually spend several hundred dollars at the store each trip,” she said. “As a cross-border shopper, I enjoy finding clothes in the US that are different from the stores here. [Kohl’s] sales are amazing and until recently there were so many options for clothing, purses, home goods and seasonal decor.”
But her last trip, on Aug. 13, to Kohl’s in Watertown, NY, was disappointing. Miklosik said she left the store “in a near panic attack due to the confusion and chaos.”
“This visit I spent $12.10 on a reusable shopping bag with the Kohl’s logo and two stuffed animals with the proceeds going to the Kohl’s Cares Foundation,” she said. “I even told the cashier I was so overwhelmed I had to leave and maybe I’d try again the next day. I didn’t.”
