(CNN) — Kohl’s doesn’t seem to be taking a break, and it could only be itself to blame.
The department store chain presented a bleak outlook for 2022 on Thursday, saying it expects full-year sales to fall 5% to 6% compared to a year ago and blames high inflation for preventing shoppers — particularly the middle incomes – spend more in its stores. The company also reported a decline in revenue and profit for the quarter ended July 30.
Shares of Kohl fell more than 7% on Thursday.
But the economy is not the only problem. Kohl’s, similar to other major chains including Target and Walmart, is stuck with a lot of excess inventory that it can’t clear out. The chain’s inventory was 48% higher in the quarter than at the same time last year.
“We have adjusted our plans and implemented actions to reduce inventory and reduce costs to account for weaker demand,” Kohl CEO Michelle Gass said in a statement.
With more than 1,100 stores in the US and annual sales of approximately $19 billion, Kohl’s is the largest department store chain in the United States. But the company is struggling to find a path for itself.
Kohl’s floated and then withdrew the idea of selling itself to Franchise Group (FRG), a holding company that owns The Vitamin Shoppe and other retail brands, which the company said was due to funding difficulties and a tough economic environment.
The retailer is trying different tactics to stay relevant, especially for younger consumers. It recently partnered with popular cosmetic brand Sephora to open mini Sephora stores in its locations. Kohl’s said the move has helped it gain a million new customers since August, who are younger, more diverse and shop more often than the average consumer.
And last week, the retailer announced it was rolling out a self-collection option across all of its stores for online orders within a two-hour period.
But all these efforts, while necessary for Kohl’s, cannot fully camouflage the chain’s most fundamental problem, said Neil Saunders, retail analyst and managing director at GlobalData Retail.
“In our opinion, the main source of Kohl’s misery is internal. Most notably, the company has lost the plot on merchandising and assortment planning and appears to be taking a seemingly random approach to buying. The result is a jumble of disjointed products in stores, exacerbated by a very serious deterioration in retail standards,” Saunders said in a note on Thursday.
“In the past, while a little uninspired, Kohl’s was disciplined and neat in his presentation. In the past year, all that has gone out the window,” Saunders said. “In this kind of economic environment, consumers will quickly abandon purchases and stores that require too much effort for too little reward.”
Katherine Miklosik, who lives in the Toronto area, said she has been shopping at the department store chain for decades and is such a devoted Kohl’s fan that whenever she travels to the United States, she carries her Kohl’s card and Kohl’s coupons with her.
“I usually spend hundreds of dollars at the store every trip,” she said. “As a cross-border shopper, I enjoy getting clothes in the US that are different from the stores here. [Kohl’s] sales are great and until recently there was such a wide variety of options for clothes, purses, housewares and seasonal decorations.
But her last trip, August 13, to a Kohl’s in Watertown, NY, was a disappointment. Miklosik said she left the store “in a near panic attack from the jumble and chaos.”
“During this visit, I spent $12.10 on a reusable shopping bag with the Kohl’s logo and two stuffed animals, the proceeds of which went to the Kohl’s Cares Foundation,” she said. “I even told the cashier that I was so overwhelmed that I had to leave, and that I might try again the next day. I do not have.”
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