Kohl’s has reported a sales decline for the first quarter, which an analyst attributed mainly to internal factors.
The department store chain saw net sales fall 4.1 per cent to $3 billion during the quarter ended May 3, with comparable sales also down 3.9 per cent.
“Kohl’s begins its new fiscal year in much the same position as it ended the old one: As a company that has lost the ability to navigate, and which is running up against the rocks,” GlobalData MD Neil Saunders commented.
He said the sales declines were not primarily due to a difficult market, but stemmed from poor management decisions, a serious neglect of retail fundamentals, and a lack of a coherent vision to take the company forward.
The company’s first-quarter sales have dropped 20 per cent since 2019, the analyst noted, adding that this is one of the worst performances in mainstream retail and is not sustainable in the long term.
Saunders pointed out three principal areas that need immediate attention, the first being injecting more discipline into the shop floor to make stores more presentable and easier to shop.
The second is better range management, as there is too much inventory, and all the brands blend into one, he continued.
The third is sorting out pricing, Saunders stated, explaining that too many of Kohl’s prices are out of line with the market.
“Solving these things will not remedy every problem, but it will be a good start at putting Kohl’s back on track. Even so, the remedies will take time to deliver as too much rot has set in at the company, and winning back lost customers and diverted spending will be far from easy,” Saunders elaborated.
“So far, we have not seen much evidence that Kohl’s has any grand plan or vision, and the concern is that this won’t come into play until a permanent CEO has their feet firmly under the boardroom table,” he added.
According to the analyst, finding a new CEO will be difficult, as so much effort is required to right the wrongs, and the chances of failure are high.
For the full year, the company expects net sales to decrease 5-7 per cent and comparable sales to fall 4-6 per cent.
