Despite it all — COVID-19, economic disaster and a generally changed world — when Kohl’s Corp. was able to open its doors in the second quarter, it produced results that were, well, approaching normal.
The retailer’s stores were dark for about 25 percent of days in the quarter, ended Aug. 1.
Still, total sales for the quarter dropped just 23.1 percent, to $3.4 billion from $4.4 billion. The brick-and-mortar declines were offset somewhat by a 58 percent boost to the web business, but even so, the end result suggests that when Kohl’s is able to open its doors, the overall business is close to on par with a year ago.
Chief executive officer Michelle Gass demurred, declining to tiptoe up to any kind of a forecast when WWD asked her on a call with reporters if the trend suggested Kohl’s business could be flattish if stores stayed opened.
What she did say was, “I feel very good about how we’ve demonstrated our ability to operate in this environment.”
Investors, however, appear to be ready to run at any sign of weakness and shares of Kohl’s fell 14.7 percent to $20.01 after the company alluded to some sales deceleration at the end of the quarter and a slow back-to-school start.
Even so, Kohl’s certainly showed some resilience during the quarter and that in itself was a reassuring consumer indicator in a retail market that’s seen J.C. Penney, Neiman Marcus, J. Crew, Ascena and many more go bankrupt. (Walmart Inc., which unlike Kohl’s was able to stay open as an “essential” retailer, also gave a good read on the quarter with U.S. comparable sales up 9.3 percent).
Kohl’s net income for the quarter fell to $47 million, down sharply from the $241 million registered a year earlier, but still much better than the $541 million loss seen in the first quarter. (On an adjusted basis, Kohl’s posted a loss of $39 million, down from earnings of $247 million).
The company also ended the quarter with $2.4 billion in cash and equivalents, a stockpile that should help the retailer bear up to any further disruptions and position for the future.
For the women’s fashion business, that future is much more focused. By the fourth quarter, the company — which recently dropped eight brands, including Jennifer Lopez, Dana Buchman and Juicy Couture — will have 40 percent fewer choices in its women’s offering, but 50 percent more depth.
Gass said the pandemic, which has brought overall inventories down 26 percent, has helped the company accelerate the transformation of its women’s business.
“It really focused the organization to be very decisive and very plan-full around the inventory that we are buying,” the ceo said. “Does it fulfill our future strategy?”
Gass also has big plans for beauty and she told analysts on a separate conference call that: “We remain committed to growing our beauty business, which rebounded nicely as stores reopened….Beauty is an area of growth for the company.”
Away from the silver linings, Gass acknowledged: “In July, we did experience some sales deceleration from June’s strength as COVID concerns heightened in areas of the country where cases have been escalating. We also saw a softer start to the back-to-school selling season given increased uncertainty around kids returning to school.”
The holiday season is also a big unknown, with Gass expecting it to start earlier than usual, in October.
“It will be a holiday season like no other,” she said.
But she is also looking beyond that.
“Over the long term, there’s a lot of change in consumer behaviors, as you’re seeing, as well as a lot of disruption in the retail industry,” the ceo said. “So we are navigating both the short term, but importantly, pointing to the long term on this and putting things in place to just further solidify our foundation.”