Kohl’s home sales continue to lag in volatile retail environment | Home Textiles Today

Koh’s expects the holiday season to grow more promotional and plans to end Q4 with clean inventories.

Menomonee Falls, Wis. – Kohl’s yanked its guidance for the full year, citing a recent downturn in sales, the unpredictable macroeconomic environment and the unexpected departure last week of former CEO Michelle Gass.

During this morning’s abbreviated Q3 call with investors, Kohl’s also shared the qualities it is seeking in a new chief executive officer, shifting consumer behavior and its inventory plans for 2023.

Here are the key takeaways:

Something went south in October. Sales at Kohl’s were stable in August and September, then began decelerating in late October, with softness continuing into November. [Editor’s note: Macy’s and Target reported similar trends.] Although Kohl’s is beginning to see an improvement, it now expects holiday spending to spike closer to Christmas, in line with the pre-covid shopping patterns.

Category performance. Home and children’s brought up the rear during Q3, under-performing the company’s 6.9% comparable sales decrease. Accessories turned in the strongest performance, with comp up in the mid teens. The core women’s business out-performed the company, but was flat to last year.

Consumer spending: Kohl’s is attracting more lower-income shoppers and more high-income shoppers, but its core middle-income shoppers are purchasing fewer items per trip and trading down to value-oriented private brands.

Inventory position and 2023 plans. Kohl’s pack-away merchandise in now on the floor, goods are flowing in a more orderly fashion and the company expects to enter 2023 clean. For 2023, “We are planning inventory commitments conservatively,” said Jill Timm, CFO.

The company has launched its search for a new CEO, but does not have a timeline for filling the position, according to Peter Boneparth, chairman of the board. Interim CEO Tom Kingsbury has committed to staying the course until a new chief settles in.

“Kohl’s has always been known for brands, value and convenience, so it’s important that we land a candidate that has great brand-building experience, understands our go-to-market value proposition and has deep omni channel experience,” said Boneparth.

Kohl's sales and earns chart Q3

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