Kohl’s made big gains in its third quarter, declared its Sephora shop roll out a success and worked to deal with supply-chain challenges.
Kohl’s beat a Yahoo Finance-published analyst consensus third quarter estimate on earnings, for 64 cents per diluted share, and revenue, for $4.27 billion.
Comparable sales increase 14.7% year over year in the quarter. Total revenue was $4.6 billion versus $3.98 billion in the year-prior quarter and total sales were $4.37 billion versus $3.78 billion, Kohl’s reported. Operating income was $387 million versus $22 million in the year-before period.
Michelle Gass, Kohl’s CEO, in a conference call, said store and digital operations performed well in the quarter. Store sales advanced in the double digits and online sales gained 6% year over year and 33% on a two-year basis to reach 29% of total sales.
Home brands that had strong performances in the quarter, according to Kohls, include Ninja and Shark.
Newly installed Sephora shops are are adding credibility to Kohl’s as a more modern, upscale and youthful retailer, Gass said. They are driving growth in the beauty business while also giving an incremental mid-single-digit sales lift to overall revenue in the 200 stores where the Sephora at Kohl’s has launched.
Gass said, “More than 25% of Sephora at Kohl’s shoppers are new to Kohl’s. They’re younger and more diverse, and we’re successfully driving loyalty sign ups”
She added that Sephora shoppers are shopping across the stores with about half of Sephora customers purchasing in at least one segment outside the beauty category per shopping trip. Kohl’s is merchandising new brands from outside the beauty category adjacent to its Sephora operations.
On supply chain, Gas said inventory had taken a hit due to logistical challenges, hurting the women’s apparel business. The company is working to mitigate supply-chain challenges and drive product through ports to meet holiday demand. Kohl’s will emphasize product categories in which it has momentum through the holiday season, Gass said, adding, “Active and cozy for the entire family, home, toys and discovering and gifting are already in high customer demand.”
“Our strategic efforts to transform Kohl’s into the leading destination for the active and casual lifestyle continue to build momentum,” Gass said. “We delivered another quarter of record earnings with both sales and margins exceeding expectations.During the quarter, we drove accelerated growth in Active and successfully launched several new brand partnerships, including the initial rollout of 200 Sephora at Kohl’s stores, which are off to a great start… We are raising our full-year 2021 guidance and continue to accelerate our share repurchase activity, reinforcing our commitment to driving shareholder value.”