Kohl’s retooling plan has been set in motion.
The middle-market department store released quarterly earnings Tuesday with mixed results.
The figures may have beat analyst expectations, but they weren’t enough to tame investor fears. Company shares, which were up more than 4 percent during pre-market hours, took a U-turn during the day’s trading session, closing down 6.9 percent to $44.88 a share.
Total revenue for the three-month period ending Aug. 3 was $4.4 billion. That’s down from $4.5 billion over the same period a year ago. Total income was $247 million, down from $292 million in 2018, a decline of 15 percent.
Even so, Michelle Gass, chief executive officer of the Menomonee Falls, Wisc.-based retailer, said she’s pleased with the results.
“Comparable sales were better than the first quarter and improved during the period, turning positive during the last six weeks of the second quarter with 1 percent growth,” Gass said in a statement. “This positive trend has continued into August driven by a successful start to the back-to-school season. We are confident that our upcoming brand launches, program expansions and increased traffic from the Amazon returns program will incrementally contribute to our performance during the balance of the year and beyond.”
Gass told analysts on Tuesday mornings conference call that activewear — in particular brands such as Nike, Under Armour and Adidas — along with accessories and men’s, are bright spots in the business. To continue the push in the active category, the retailer will add 100 Adidas shops-in-shop to Kohl’s stores this fall.
“We are showcasing our leadership position as a destination for active and casual apparel and leaning into categories that families are focused on right now [during back-to-school shopping] and that Kohl’s has a leading market position in: denim, active, footwear and backpacks,” Gass said.
But it’s not just b-t-s shopping that is helping the department store regain some ground in an era of online shopping.
Most recently, Kohl’s announced plans to beef up its fashion cred with the launch of Curated by Kohl’s. Starting this fall, Kohl’s will partner with Facebook to bring brands, such as direct-to-consumer lingerie company Adore Me and plus-size apparel retailer East Adeline by Dia&Co, to more than 50 stores and on kohls.com.
In April, Kohl’s began accepting Amazon returns at Kohl’s locations. Then in May, Kohl’s inked a deal with Fanatics, the largest retailer of licensed sports merchandise, to expand its assortment of fan gear on Kohl’s web site.
And there’s more coming. Nine West will officially land in Kohl’s stores next month. In November, Kohl’s will be the exclusive retailer of Elizabeth and James branded apparel, the lifestyle brand founded by Ashley and Mary-Kate Olsen. The department store will also have a capsule collection created by fashion designer Jason Wu.
All of these initiatives help drive traffic in stores and online — and attract new Millennial shoppers.
Still, the results are Kohl’s third consecutive quarter with sales declines and company shares are down more than 44 percent year-over-year, prompting some investors to think the department store’s momentum has come to an end.
“We are cautious on shares of Kohl’s into [second-quarter] 2019 [earnings per share],” Jen Redding, an analyst at Wedbush, wrote in a recent note. “Despite Kohl’s lead in search interest trends among peers, department stores meaningfully trailed off-price and speciality retail, as demonstrated by disappointing [second-quarter] results from Macy’s.”