Kohl’s swings to surprise loss; warns on profit for year

Mar 1, 2023, 6:02 AM | Updated: 9:46 am

NEW YORK (AP) — Kohl’s plans to cut inventory by roughly 5% this year, be more surgical with discounts and change how it showcases its merchandise to get shoppers to buy after the department store chain reported a big loss and a sales slump in the fourth quarter.

The retailer, based in Menomonee Falls, Wisconsin, also issued an annual profit outlook that fell below Wall Street expectations as the company grapples with customers cutting back on discretionary items amid stubbornly high inflation.

Shares dropped as much as 10% before the opening bell Wednesday but clawed back some of those losses after Kohl’s executives detailed plans to energize its business.

In a conference call with analysts, newly appointed CEO Tom Kingsbury said Kohl’s is making progress in cosmetics with its Sephora partnership, whose beauty shops were launched in 2021 and are being rolled out throughout the chain. However, he acknowledged that the department store chain has lost ground in other key categories.

“Candidly, I know we can do better,” Kingsbury said.

A number of major retailers, Target, Walmart and Home Depot among them, have issued weaker financial outlooks for 2023 in a challenging economic environment for Americans. But Kohl’s, which has been under pressure from shareholders to revive sales, has been particularly hard hit because it relies heavily on sales of discretionary items like clothing and caters to middle-income shoppers more vulnerable to rising prices.

Yet industry analysts believe Kohl’s has made significant missteps.

Neil Saunders, managing director of GlobalData Retail, said that stores have grown messy and unappealing for shoppers.

“Over the holidays, shops should be inspiring and uplifting, enticing consumers into buying,” said Saunders. “Unfortunately, Kohl’s were the exact opposite with messy merchandise, bad lighting, and uncoordinated ranges all contributing to a dispiriting and confusing experience. Sadly, this problem has been getting worse over time and it is one of the first things the new executive team should address if it wants to stop the rot. “

The disappointing performance underscores the headwinds that Kingsbury faces. Kingsbury, who was interim chief executive, was named its permanent CEO last month. The Kohl’s board member took over for Michelle Gass, who was named president of Levi Strauss & Co. late last year.

On Tuesday, Kohl’s announced that 30-year retail veteran Dave Alves will become Kohl’s president and chief operating officer, reporting to Kingsbury, in April.

Kohl’s is cutting the number of general merchandise managers almost in half, from four from seven, with hopes of making the company more agile.

The company is paying close attention to inventory levels, too. Retailers, including Kohl’s, had to slash prices last year as Americans shifted their spending from clothing to nights out, travel or, because of inflation, on buying necessities like food.

Kohl’s inventory was up 48% year-over-year at the end of the second quarter, and up 34% at the end of the third. Inventory was up 4% year’s end, the company said.

Kohl’s said it will be more targeted with sales, instead of discounting across the board. It will also pace targeted price cuts rather than at the end of a selling period so that it can continually refresh its merchandise.

Kohl’s reported a loss of $273 million, or $2.49 per share for the quarter ended Jan. 28. Industry analysts had projected per-share profits of 97 cents, according to a poll by FactSet.

Last year during the same period, the company earned $299 million, or $2.20 per share.

Sales fell a little more than 7% to $6.02 billion. Comparable-store sales — those from stores opened at least a year and online channels — slid 6.6%.

The company said that it expects net sales to be down anywhere from 2% to 4% for the year. It also expects profits to be $2.10 per share to $2.70 per share, excluding any non-recurring charges for the year. Analysts were expecting $3.17 per share.

Kohl’s shares slipped 2% in midday trading Wednesday.


Follow Anne D’Innocenzio on Twitter

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


A Boeing 737 Max suffered damage to parts of the plane's structure after it went into a “Dutch ro...

Associated Press

Plane that did ‘Dutch roll’ on flight from Phoenix suffered structural damage, investigators say

A Boeing 737 Max suffered damage to parts of the plane's structure after it went into a “Dutch roll” during a flight from Phoenix last month.

1 day ago

This photo provided by Randy Shannon shows Mooney Falls on the Havasupai reservation outside the vi...

Associated Press

Dozens report illness after trips to waterfalls near Grand Canyon

Dozens of hikers say they fell ill during trips to a popular Arizona tourist destination that features towering blue-green waterfalls deep in a gorge neighboring Grand Canyon National Park.

2 days ago

Mugshot of Rudy Giuliani, who was processed Monday, June 10, 2024, in the Arizona fake electors cas...

Associated Press

Rudy Giuliani posts $10K cash bond after being processed in Arizona fake electors case

Rudy Giuliani, a former New York City mayor and Donald Trump attorney, was processed Monday in the Arizona fake electors case.

5 days ago

FILE - White House former chief of staff Mark Meadows speaks with reporters at the White House, Wed...

Associated Press

Former Trump chief of staff Mark Meadows pleads not guilty in Arizona fake elector case

Former Donald Trump presidential chief of staff Mark Meadows and Trump 2020 Election Day operations director Michael Roman pleaded not guilty Friday in Phoenix to nine felony charges for their roles in an effort to overturn Trump's Arizona election loss to Joe Biden.

8 days ago

deadly heat wave last summer...

Associated Press

After a deadly heat wave last summer, metro Phoenix is changing tactics

Fresh memories of the deadly heat wave last summer have led Arizona authorities to launch new tactics ahead of summer 2024.

19 days ago

A Yuma man has been arrested for allegedly starting a wildfire in a national wildlife preserve near...

Associated Press

Man accused of starting wildfire in national wildlife preserve in Yuma

A Yuma man has been arrested for allegedly starting a wildfire in a national wildlife preserve near the California border.

19 days ago

Sponsored Articles


Midwestern University

Midwestern University Clinic visits boost student training & community health

Going to a Midwestern University Clinic can help make you feel good in more ways than one.



Desert Institute for Spine Care is the place for weekend warriors to fix their back pain

Spring has sprung and nothing is better than March in Arizona. The temperatures are perfect and with the beautiful weather, Arizona has become a hotbed for hikers, runners, golfers, pickleball players and all types of weekend warriors.



Here are 5 things Arizona residents need to know about their HVAC system

It's warming back up in the Valley, which means it's time to think about your air conditioning system's preparedness for summer.

Kohl’s swings to surprise loss; warns on profit for year