Q3 sales and comps fall
The abrupt departure of former CEO Michelle Gass last week, the recent decline in sales, the unpredictability of the macroeconomic environment, and Kohl’s revised its full-year guidance downward.
Kohl’s also discussed changing consumer behavior, its inventory plans for 2023, and the qualities it is looking for in a new chief executive officer during this morning’s brevity Q3 call with investors.
Here Are the Key Takeaways:
In October, something bad happened. Sales at Kohl’s were consistent in August and September before slowing down in late October and continuing into November. [Editor’s note: Target and Macy’s both noted comparable trends.] While Kohl’s is starting to experience a recovery, it now anticipates holiday spending to peak closer to Christmas, consistent with pre-covid shopping patterns.
Category performance. During the third quarter, home and kids’ underperformed the company’s 6.9% decline in comparable sales. The best performance was given by accessories, with a comp up in the mid teens. Although it was flat from the previous year, the company’s primary women’s business outperformed it.
Consumer spending: While Kohl’s is drawing in more customers with higher incomes and lower incomes, its core middle-class customers are making fewer purchases per trip and switching to value-oriented private brands.
Plans for 2023 and the inventory situation. The company anticipates that by 2023, all of Kohl’s pack-away inventory will be on the floor and moving more smoothly. For 2023, “We are planning inventory commitments conservatively,” said Jill Timm, CFO.
According to Peter Boneparth, chairman of the board, the company has started looking for a new CEO but does not have a timetable for doing so. Till a new CEO takes over, interim CEO Tom Kingsbury has vowed to continue in his current role.
“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.
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