Can the Kohl’s turnaround be successful?
Kohl’s survived the 2015 holiday season with continued growth in its quarterly comparable sales, but just barely, raising questions about the future success of the envisioned turnaround for the Wisconsin-based retailer. The retailer has been struggling to attract new shoppers and turn the chain around.
Kohl’s reported that comparable sales rose just 0.4 percent during the holiday quarter, though it did mark the fifth straight period of growth for the company. Fiscal 2015 comparable sales increased 0.7 percent, while total sales increased 0.8 percent for the fourth quarter and 1.0 percent for fiscal 2015. The numbers may mean an adjustment to the Greatness Agenda, launched in 2014, which focused on improving in-house brands, ramping up digital efforts, and experimenting with new formats, including a new outlet store. And Janet Schalk, EVP and CIO at Kohl’s Department Stores, also sat down with Innovative Retail Technologies last year to discuss how the company handles omni-channel order fulfillment and customer loyalty.
But this year’s holiday sales were much more volatile and uneven than predicted, as Kohl’s CEO Kevin Mansell explained, attributed in part to the weather. He stated, “Sales were very volatile and less than planned in the fourth quarter. We experienced a very strong holiday selling season from the week of Thanksgiving through Christmas. These results were offset by a very slow start to the quarter in early November and a weaker-than-expected January as soft demand for cold-weather goods led to lower store traffic in these more discretionary shopping periods.”
Mansell also reported that Kohl’s digital business remained strong, with online generated orders and sales each growing approximately 30 percent during the quarter. He said, “Our ability to provide both ship-from-store and buy online, pickup in store capabilities in all stores really resonated with our customer.”
The sales shortfall resulted in the adjustment of Kohl’s profit forecast for the quarter from $4.40-$4.60 to just $3.95-$4.00 per share.
Kohl’s is also being challenged by improving sales for competitor J.C. Penney’s, as Fortune pointed out, which reported best-in-class holiday season sales growth.
Last month, the Wall Street Journal reported that Kohl’s may hire an investment bank to advise it on various alternatives, including taking itself private, to combat any incursion by such investors, worried that the company’s big stock swoon in the past year could attract unwanted attention.
