Kohl’s has a mess of inventory on its hands

Kohl’s can’t seem to catch a break, and they may only blame themselves. People walk near the Kohl’s department store in Doral, Florida, on June 7. (Joe Raedle, Getty Images)

Estimated reading time: 3-4 minutes

NEW YORK (AP) — Kohl’s can’t seem to catch a breath, and it may only blame itself.

The department store chain on Thursday presented a gloomy outlook for 2022, saying it expects full-year sales to fall 5% to 6% compared to a year earlier and blames high inflation for preventing shoppers, specifically their middle-income consumers, from spending more in their stores. The company also reported a drop in sales and profit for the quarter ended July 30.

Kohl’s shares fell more than 7% on Thursday.

But the economy is not his only problem. Kohl’s, like other big chains like Target and Walmart, has a lot of problems excessive inventory that cannot be cleared. The chain’s inventory in the quarter was 48% above its level in the same period last year.

“We have adjusted our plans, implementing actions to reduce inventory and cut expenses to account for a softer demand outlook,” Kohl CEO Michelle Gass said in a statement.

unstable course

With more than 1,100 stores in the US and about $19 billion in annual sales, Kohl’s is the largest department store chain in the United States. But the company has struggled to find a way forward for itself.

Kohl’s raised and then withdrew the idea of ​​selling to the Franchise Group, a holding company that owns The Vitamin Shoppe and other retail brands, which the company said was due to financial problems and a difficult economic environment.

The retailer is trying a variety of tactics to stay relevant, especially to younger consumers. It recently partnered with popular cosmetics brand Sephora to open mini-Sephora stores at their locations. Kohl’s said the move has helped it acquire a million new customers since last August who are younger, more diverse and shop more frequently than the average consumer.

And last week, the retailer announced that it was rolling out a self-pickup option at all of its stores for online orders within a two-hour window.

But all of these efforts, while necessary for Kohl’s, can’t entirely camouflage the chain’s most basic problem, said Neil Saunders, retail analyst and CEO of GlobalData Retail.

“In our view, the primary source of Kohl’s problems is internal. Most notably, the company has lost its way in terms of merchandising and range planning and appears to be taking a seemingly haphazard buying approach. The result it is a jumble of unrelated products in stores, compounded by a very serious deterioration in maintenance standards,” Saunders said in a note on Thursday.

“It used to be the case that, while a bit dull, Kohl’s was disciplined and orderly in its presentation. Over the last year, all of that went out the window,” Saunders said. “In this type 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 shopped at the department store chain for decades and is such a dedicated fan of Kohl’s that every time she travels to the United States, she carries her Kohl’s card and coupons with her. Kohl’s discount.

“I usually spend several hundred dollars at the store each trip,” he said. “As a cross-border shopper, I enjoy shopping for clothing in the US that is different from the stores here. The (Kohl’s) sales are amazing and until recently there was a wide variety of options for clothing, bags, home goods and seasonal decoration.

But his last trip, on August 13, to Kohl’s in Watertown, New York, was a disappointment. Miklosik said he left the store “almost in a panic attack from the mess and chaos.”

“On this visit, I spent $12.10 on a Kohl’s logo reusable shopping bag and two stuffed animals with proceeds going to the Kohl’s Cares Foundation,” he said. “I even told the cashier that he was so overwhelmed that I had to leave and maybe I’d try again the next day. I didn’t.”

related stories

Latest business and technology stories

More stories that may interest you

Leave a Comment

Your email address will not be published.