The Reporter (Lansdale, PA)

Kohl’s swings to surprise loss; warns on profit for year

- By Anne D’innocenzio

Kohl’s plans to cut inventory by roughly 5% this year, be more surgical with discounts and change how it showcases its merchandis­e to get shoppers to buy after the department store chain reported a big loss and a sales slump in the fourth quarter.

The retailer, based in Menomonee Falls, Wisconsin, also issued an annual profit outlook that fell below Wall Street expectatio­ns as the company grapples with customers cutting back on discretion­ary items amid stubbornly high inflation.

Shares dropped as much as 10% before the opening bell Wednesday but clawed back some of those losses after Kohl’s executives detailed plans to energize its business.

In a conference call with analysts, newly appointed CEO Tom Kingsbury said Kohl’s is making progress in cosmetics with its Sephora partnershi­p, whose beauty shops were launched in 2021 and are being rolled out throughout the chain. However, he acknowledg­ed that the department store chain has lost ground in other key categories.

“Candidly, I know we can do better,” Kingsbury said.

A number of major retailers, Target, Walmart and Home Depot among them, have issued weaker financial outlooks for 2023 in a challengin­g economic environmen­t for Americans. But Kohl’s, which has been under pressure from shareholde­rs to revive sales, has been particular­ly hard hit because it relies heavily on sales of discretion­ary items like clothing and caters to middle-income shoppers more vulnerable to rising prices.

Yet industry analysts believe Kohl’s has made significan­t missteps.

Neil Saunders, managing director of GlobalData Retail, said that stores have grown messy and unappealin­g for shoppers.

The disappoint­ing performanc­e underscore­s the headwinds that Kingsbury faces. Kingsbury, who was interim chief executive, was named its permanent CEO last month. The Kohl’s board member took over for Michelle Gass, who was named president of Levi Strauss & Co. late last year.

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