Kohl’s Corp., in posting a profit that surprised Wall Street, asserted its turnaround gained traction in the first quarter. Plans to sustain momentum include putting more emphasis on core home categories and such less central but related categories as outdoor, pets and gifting.
First quarter net income was $14 million, or 13 cents per share, versus $14 million, or 11 cents per share, in the year-earlier period.
An analyst consensus estimate published by Yahoo Finance called for a loss of 42 cents and revenues of $3.34 billion.
Comparable sales slid 4.3% in the quarter year over year, according to the company. Net sales were $3.36 billion while total revenue was $3.57 billion versus $3.47 billion and $3.72 billion, respectively, in the year-previous period. Operating income was $98 million versus $82 million in the year-before quarter.
In a conference call, Tom Kingsbury, Kohl’s CEO, said the first quarter home business was disappointing but added that domestic goods constitute “an area we are focused on.”
Kohl’s is working to improve results by rebuilding its core home business as well as by growing underrepresented categories such as gifting, pets and outdoor. Kohl’s is currently in the process of remerchandising home, he said. As it did in the 2022 year-end holidays, Kohl’s will showcase gifting and home decor at the front of the store to inspire customers as they arrive. Gifting near store entrances during the last holiday season proved highly successful and continued to do well through Easter and Mother’s Day this year, Kingsbury maintained. Now, Kohl’s is resetting gifting with Americana-themed presentations to ready stores for Memorial Day and the Fourth of July. At the same time, Kohl’s is expanding household and related categories as positioned in stores including home decor, outdoor and pet goods. To make space in stores, Kohl’s is consolidating to one checkout and adding self-checkout stations at some of its locations.
Kingsburg put some emphasis on beauty sales results, up 150% in the first quarter as the company opens more Sephora at Kohl’s shops.
In general, he said, the company is simplifying in-store signage and promotional strategy, moving to targeted marketing and scheduled clearance events. Kohl’s customers are moving back to in-store shopping as the 26% e-commerce sales penetration recorded in the first quarter was down from last year but still up from pre-pandemic levels. Going forward, checkouts will include more impulse merchandise, he noted.
In announcing first-quarter results, Kingsbury said. “Our first quarter results were in line with our expectations and represented a first step as we work to drive sales and earnings performance over the long term. We delivered margin expansion, as well as a 6% reduction in inventory. In addition, our store’s business achieved productivity gains, and Sephora at Kohl’s continued its sales momentum. We are making progress against each of our key 2023 priorities, enhancing our customer experience, simplifying our value strategies, managing inventory and expenses with discipline, and strengthening our balance sheet. While there is still work to be done and the macroeconomic environment remains challenging, we are affirming our 2023 guidance and continue to have conviction in Kohl’s longer-term opportunity.”