Kohl’s reported a sales decline in the fourth quarter, which an analyst described as “a terrible performance” amid a bustling holiday shopping season.
The company’s net sales for the quarter that ended February 1 fell 9.4 per cent to $5.2 billion while comparable sales, which stripped out the extra trading week last year, dropped 6.7 per cent.
“In any circumstances, this would be a poor performance,” commented GlobalData MD Neil Saunders.
“That it was delivered over a period of robust consumer spending when shoppers were willing to open their wallets underlines the ongoing struggles of Kohl’s to justify its place in the retail market,” he added.
According to the analyst, Kohl’s sales have been down by over a fifth since 2019. Sales declined despite contributions from Sehpora, which means numbers for the core business are even worse, he said.
The company did put out some efforts during the quarter, including a more expansive selection of holiday merchandise, but displays were uninspiring and prices were way too high compared to competitors like Target, Saunders explained.
Regarding core ranges such as apparel and home, Kohl’s has been losing customers to TJMaxx, Target, Amazon, and Walmart, which are experts at delivering a better experience that offers value, he continued.
“The erosion has been in play for many years, and no one has addressed it,” Saunders remarked.
For the full year, net sales decreased 7.2 per cent to $15.4 billion, and comparable sales fell 6.5 per cent. Net income was down by almost a third from $317 million last year to $109 million.
The company expects net sales to be down 5-7 per cent and comparable sales down 4-6 per cent this fiscal year.
While the consumer economy might be slowing, this represents a continuation of the descent of Kohl’s, said Saunders.
New CEO Ashley Buchanan has laid out some sensible ideas such as a more curated assortment, elevating private brands, and investing more in omnichannel, but the question remains whether these plans are backed by proper investments, the analyst concluded.
