Image Courtesy of Kohl's
On his first quarterly analyst call since being named Kohl’s CEO, Ashley Buchanan announced a number of “tactical, short-term, no-regret moves” to help stabilize the retailer’s business, including rebalancing assortments, improving in-stocks, and reducing coupon exclusions.
Buchanan, who most recently served as the CEO of Michaels and previously held leadership roles at Sam's Club and Walmart, said that since taking over as CEO in mid-January, he’s learned that Kohl’s is “built on a solid foundation” that includes more than 1,100 stores across the country serving over 60 million customers, with about half signed up as loyalty members.
However, efforts over the last few years to attract a new customer have “caused friction with [the retailer's] core customer.”
The initial phase of Kohl’s turnaround will focus on three areas:
- Offering a curated, more balanced assortment that fulfills needs across all customers.
- Reestablishing Kohl's as a leader in value and quality.
- Delivering a frictionless shopping experience.
On curation, Buchanan said Kohl’s will continue to prioritize newer key categories that are resonating with customers, including Sephora, home décor, and its impulse departments near cash registers. However, the addition of new products to attract new customers resulted in a deemphasis of “products and categories that our core customers love.” A refocus last year on categories that had lost traction, including fine jewelry, petites, and proprietary brands, is showing improvement and will continue. Buchanan said, “Our goal will be to drive improved assortment clarity across all categories with a purpose behind each brand and each product.”
In reestablishing its value proposition, a primary focus will be on elevating proprietary brands that stand for quality and value while also offering an exclusive reason to shop at Kohl’s. Buchanan said, “Kohl's has amazing proprietary brands such as Sonoma and FLX that our customers love. They serve an important purpose in our value proposition, offering lower price points on great products for our customers.”
New brands will be added that “fill a purpose” for customers and “drive productivity” for Kohl’s. National brands will remain a core focus. Buchanan said, “We know our customers love national brands, and they trust to buy these brands at Kohl's knowing they got a great deal.”
In pricing, Kohl’s will continue to emphasize promotions, coupons, and Kohl's Cash but “simplify” them by reducing the number of brand exclusions. Buchanan said, “Over the years, our list of excluded brands on our coupon has grown too large with the percent of sales that are excluded from coupons reaching an all-time high in 2024. This has created confusion and frustration with our loyalist customer.”
Kohl's website reveals proprietary or exclusive brands, which are largely the only ones currently eligible for coupons.
The retailer will further “continue to work to simplify our messaging by reducing the complexity of our offers as well as amplify our great prices as we have seen this start to resonate with our customers.”
The third priority involves delivering a “consistent experience across all channels,” including reducing out-of-stocks for high-volume items, particularly basic and essentials. In-store layouts are being realigned to improve category placement and “create an easier shopping experience for customers to find their frequently purchased items and discover new and relevant choices.” Kohl’s is also looking to better capitalize on synergies between online selling and the store.
Shares of Kohl’s fell around 25% after the retailer posted its fourth-quarter results this week due to a warning that same-store sales for the current year are expected to slide in the range of 4% to 6% following declines of 6.5% in 2024, 4.7% in 2023, and 6.6% in 2022.
Buchanan cautioned that his team is “still developing” the long-term view of Kohl’s value proposition and go-to-market strategy while noting that any merchandise changes won’t arrive until next year given long lead times. He stressed, “I want to set the expectations that this turnaround, while very achievable, is going to take some time.”