As retailers across the country shut stores and seek bankruptcy protection in the pandemic, Kohl’s is buttressing its commitment to brick-and-mortar as the driver of future sales success.
The Menominee, Wisconsin-based department-store chain said sequential sales improved through the fourth quarter and into January, giving it momentum as it strives to put new initiatives in place and overcome the sales slowdown brought on by the COVID-19 pandemic.
Digital sales jumped 20% and are expected to account for more than 40% of total sales “with our stores playing a critical role in supporting the heightened demand,” CEO Michelle Gass said in a statement. Quarterly results are slated to be released next month.
“We are not closing stores,” Gass said in an interview with CNBC. Some 90% of Kohl’s 1,100 stores ring up over $41 million in cash, and she said she is leveraging the footprint toward fulfillment and distribution. Kohl’s has become a pickup and drop-off station for Amazon orders, which Gass said helped drive traffic in January as consumers were returning Amazon merchandise.
“You could assume that returns, which typically are higher in January, played a role in driving traffic toward the end of the quarter,” Gass added. “I am a big, big believer in stores.”
That's a mantra she has repeated often during the pandemic as Kohl’s quickly pivoted to customer purchasing options including curbside pickup and buy online, pick up in store.
“As things get back to normal, I think people might be surprised,” she added. “Getting out and shopping is much more than shopping. It’s culture. It’s social. It’s entertainment.”
Kohl’s expects to report a 10% decline in fourth-quarter revenue on a year-over-year basis and forecast an 11% pullback in comparable-store sales, a key industry benchmark of sales at stores open longer than a year. If the same-store sales projection holds up, it will represent the third straight quarter of improvements from the deep drops tied to the early days of the pandemic when shopping centers and malls were shut down completely.
Those numbers were deeper than Wall Street’s expectations, but better than Kohl’s was anticipating, Gass said. “Our fourth-quarter performance exceeded our expectations across all key metrics with sales strengthening as we moved through the period,” she said in the preliminary earnings statement.
She noted the company better managed expenses and is going into new programs such as opening Sephora beauty counters in Kohl’s stores this year and beyond. The company expects to have Sephora products in 200 stores this year with a goal of reaching 850 stores in three years.