Kohl’s has reported lower sales and profit for the third quarter, a lingering problem that an analyst blames mostly on internal factors.
The department store’s net sales slid 2.8 per cent in the quarter ended November 1, with comparable sales down 1.7 per cent.
Operating income during the period dropped 25 per cent to $73 million, and net income decreased 27 per cent to $8 million.
According to GlobalData MD Neil Saunders, Kohl’s newly appointed CEO, Michael Bender, is inheriting a “Gordian knot of problems” that will not be resolved without a bold change of course and some decisive action.
Saunders stressed the company’s poor performance is mainly driven by internal factors.
“While it is true that market conditions are a little challenging, many other retailers across the value spectrum are engineering growth. That Kohl’s is not – and that it has posted 14 consecutive quarters of comparable sales declines – speaks to the fact that its basic value proposition is broken,” he said.
“While this assessment may seem harsh, it is worth noting that since the third quarter of 2019, although the overall market for the things Kohl’s sells has grown by 34.2 per cent, Kohl’s own sales have fallen by 21.8 per cent.
“This kind of slide is only possible because Kohl’s has become increasingly disconnected from customers – some of whom have defected entirely to other retailers, and some of whom are simply spending far less at the chain than they once did,” he continued.
There is still good news for the retailer, Saunders said, pointing to the new leader’s focus on providing better value for customers.
While there certainly needs to be some re-engineering of opening price points, value is much wider than price and extends to exclusivity, style and an engaging shopping experience, the analyst said.
“This will take significant time and investment, but it is a prerequisite for the long-term survival of the company,” he added.
For the full year, Kohl’s expects net sales to decrease 3.5-4 per cent and comparable sales to fall 2.5-3 per cent.
