Kohls is a mess in more ways than one

Kohl’s is a mess in more ways than one

Presenting a bleak outlook for 2022 on Thursday, the department store chain said it expects full-year sales to fall 5% to 6% year-on-year, blaming high inflation for holding back shoppers — especially middle-income consumers to spend more in his shops. The company also reported lower sales and earnings for the quarter ended July 30.

Kohl’s shares fell more than 4% in morning trade.

But the economy is not the only problem. Kohl’s (KSS), much like other big chains including Target (TGT) and Walmart (WMT), is stuck with a lot of excess inventory it can’t eliminate. The chain’s inventory for the quarter was 48% higher than at the same time last year.

“We have adjusted our plans and implemented measures to reduce inventories and cut spending to reflect the weaker demand outlook,” Kohl CEO Michelle Gass said in a statement.

choppy course

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

Kohl’s went public and then backed off the idea of ​​selling itself to Franchise Group (FRG), a holding company that owns The Vitamin Shoppe and other retail brands. The retailer is using a variety of tactics to try and stay relevant, especially for younger consumers. The company recently partnered with popular cosmetics brand Sephora to open mini Sephora stores at its locations. According to Kohl’s, the move has helped bring in 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 it would be introducing a self-pickup option for online orders within a two-hour window in all of its stores.

But all of those efforts, while necessary for Kohl’s, can’t completely disguise the chain’s most fundamental problem, said Neil Saunders, retail analyst and chief executive at GlobalData Retail.

“In our view, the root causes of Kohl’s problems are internal. Most notably, the company has lost track of merchandising and assortment planning, and appears to have a seemingly haphazard approach to shopping. The result is a jumble of disjointed products in stores, compounded by a very serious deterioration in store management standards,” Saunders said in a note Thursday.

“It used to be that while Kohl’s was a little boring, it was disciplined and orderly in its presentation. Over the past year, it’s all gone out the window,” Saunders said. “In such an economic environment, consumers will be quick to abandon purchases and deals that require too much effort for too little reward.”