Menomonee Falls-based Kohl’s continues to find success with the turnaround efforts put in place at the start of the year, while macroeconomic challenges and pressure on consumers remain.
The company’s second quarter results were better than expected, though net sales were down 5.1% year-over-year at $3.3 billion. Comparable sales were also down 4.2% year-over-year.
Kohl’s earnings for the second quarter were $153 million ($1.35 per diluted share), up significantly compared to earnings of $66 million (59 cents per diluted share) during the same period last year.
Citing “operational discipline,” Kohl’s interim chief executive officer Michael Bender pointed to a few factors that led to strong earnings in Q2, including expanding gross margin by 28 basis points, decreasing inventory by 5% and reducing SG&A (selling, general and administrative) expenses by 4.1%.
“Although we are encouraged by our second quarter results and the improved sales trend we saw throughout the quarter, we also recognize that consumers continue to be pressured and are being choiceful with their purchases,” said Bender, who took over as interim CEO in May following the ousting of former CEO Ashley Buchanan.
“Specifically our lower- to middle- income customers remain the most challenged while our higher income customers have proven to be more resilient. These lower- to middle-income customers continue to prioritize value and are trading down into lower opening price point products,” Bender added.
Kohl’s core lower- to middle-income customer is the target of several of the company’s ongoing turnaround initiatives, including efforts to rebalance its product assortment from one that skewed too heavily in recent years toward new, national brands that would attract new customers. The company is now working to regain the trust — and wallets — of its loyal customer base by investing more in its private-label brands and adding more brands that are eligible for coupons.
Those efforts are so far paying off, said Bender, pointing to progress in the retailer’s long-troubled women’s category, which serves its core customer and “is a key driver of overall company performance.” Progress in the category, including positive comparative sales in July, was thanks to reinvesting in its proprietary brands, reducing choice count in the intimates category, and reintroducing petites, which was up 40% in Q2, and jewelry, up 12%.
“We experienced outsized performance in our fashion jewelry business in the quarter,” said Bender. “The fine jewelry business continues to be an opportunity for us as we work to find the right assortment and staffing. In addition, we are continuing to invest in white space categories, specifically our impulse and Sephora businesses.”
Kohl’s completed its Sephora at Kohl’s full-chain rollout in spring 2025, tracking a $2 billion sales goal, and it expanded impulse queue lines to an additional 300-plus stores in Q2. The impulse category is a units per transaction driver, which delivered 30% sales growth in Q2, the company said in an earnings presentation.
In addition to rebalancing its product assortment, Kohl’s turnaround plan includes reinforcing its reputation for value and continuing to use its omnichannel model to provide a “frictionless” shopping experience.
Kohl’s slightly adjusted its guidance for fiscal 2025 to a projected net sales decline of 5% to 6% versus 2024 (previously 5% to 7%), and a projected comparable sales decline of 4% to 5% (previously 4% to 6%). Operating margins are anticipated to range between 2.5% and 2.7% (previously 2.2% and 2.6%).
New C-suite appointments
Kohl’s recently named Arianne Parisi as its new chief digital officer and Steven Dee as its new chief technology officer.
Parisi joined the company on July 28. She has two decades of experience in retail, including 13 years in digital leadership roles at omnichannel retailers including JD Sports, The Finish Line and Nordstrom. Most recently, Parisi was chief digital officer for U.K.-based JD Sports Fashion Plc, a global omnichannel retailer of sports fashion and outdoor brands.
In her new role, Parisi will be responsible for driving Kohl’s digital business through Kohls.com and the Kohl’s mobile app.
Dee joined the company on Aug. 25 and is responsible for overseeing all technology and information platforms supporting Kohl’s omnichannel business. Prior to Kohl’s, Dee ran technology operations at Nike, Hayneedle and J.Crew and has 12 years of leadership experience at Accenture, leading clients through transformational programs in the consumer goods and retail spaces. Most recently, he was chief information and technology officer for Rodan + Fields, an American skincare and haircare company.
More articles about Kohl’s:
- Apparel brand suing Kohl’s over $8 million in unpaid invoices
- Kohl’s first quarter results beat expectations, with sales and profits under pressure
- Recently resigned Kohl’s board member raises concerns over governance
- Former Northwestern Mutual CEO named chairman of Kohl’s board
- Kohl’s fires CEO over conflict of interest, appoints interim leader
- Kohl’s chief technology and digital officer departs company
- Here’s how Kohl’s new CEO plans to execute a long-term turnaround
- Kohl’s saw sales, earnings fall in 2024
- Kohl’s cuts 10% of its corporate positions
