Source: Kohl’s
If these were normal times and you were just looking at the numbers, you wouldn’t think Kohl’s is in a great place right now. Now, however, is anything but what used to pass for normal, so CEO Michelle Gass’ assertion that the chain is “really set up to capture what will be billions of dollars of market share opportunity in the future” deserves some consideration.
First, here are the numbers. Kohl’s reported that sales fell 23 percent during the second quarter and that its back-to-school sales were “soft” as it reopened all of its stores across the country. This follows a first-quarter sales decline of 43.2 percent.
The retailer did see margin improvement in the latest quarter at 33.1 percent from the first quarter (17.3 percent) where it turned to heavy discounting to move merchandise.
Ms. Gass pointed to the chain’s digital growth, omnichannel capabilities, a loyalty program with 30 million members, brands and a disciplined approach to inventory and expenses as the foundation it will build upon. She said that Kohl’s has managed to maintain positive cash flow and put itself in a position to benefit from the large numbers of competitive retailers that have gone into bankruptcy or are likely to find themselves looking for Chapter 11 protection in the near future.
On the merchandise front, Ms. Gass said that “changing consumer behaviors” will benefit her company’s business. “Kohl's is a known destination for casual apparel and we have a large and growing digital business, supported by our stores through our expansive omnichannel capabilities.” Digital sales were up 58 percent for the retailer during the quarter, with half of all volume connected to in-store or curbside pickup.
She said that Kohl’s continues to acquire new customers during the pandemic and is positioned to make marketing investments where rivals are shuttering stores.
With the back-to-school season not shaping up as hoped, the chain is turning its attention to driving Christmas season sales. Kohl’s, like others, is moving up its promotional calendar to October.
Ms. Gass expects Kohl’s to see further digital growth during the holidays and said the “putting even greater focus and resources on our supply chain to ensure that we are positioned to drive overall productivity and manage cost of shipping as effectively as possible. While our work on this front has always been important, its priority has been elevated.”