Menomonee Falls-based Kohl’s Corp. had another disappointing quarter with net sales and comparable sales falling 8.8% and 9.3%, respectively, compared to last year.
“Sales have been a challenge for us in 2024 and weakened further in Q3,” said outgoing CEO Tom Kingsbury during the company’s third quarter earnings conference call Tuesday.
Kohl’s announced Monday that Kingsbury will be succeeded next month by Michaels CEO Ashley Buchanan. Kingsbury, who has led Kohl’s since December 2022, will stay on in an advisory role to the new CEO and retain his position on Kohl’s board of directors through his retirement in May 2025.
Net sales for the quarter totaled $3.5 billion, and the retailer reported earnings of $22 billion, or $0.20 per diluted share, down from $59 million, or $0.53 per diluted share, during the third quarter of 2023.
As a result of the continued sales pressure, Kohl’s once again adjusted its full-year guidance, projecting net sales to decrease by 7% to 8% and comparable sales to decrease by 6% to 7% compared to 2023. The company started off fiscal 2024 projecting full-year net sales to be within 1% of last year’s total and comparable sales to rise 0% to 2%.
Underperformance in the apparel and footwear businesses has driven the decline in overall sales. That part of the business has been neglected as the company has focused heavily this year on “key growth areas,” including Sephora, home decor, gifting and impulse and the rollout of its new partnership with Babies “R” Us; however, “these were unable to offset the declines in our core business,” Kingsbury said. “We are not satisfied with our performance in 2024 and are taking aggressive action to reverse the sales declines.”
He noted three main drivers of underperformance in the third quarter: a decline in store traffic, especially during the back-to-school season; a reduction in receipts in Kohl’s private-label apparel brands; and categories that have lost traction — including fine jewelry, petites and intimate apparel and legacy home products — in the shuffle of efforts to reduce inventory and invest in newer, key growth categories.
“We simply must do a better job of balancing these initiatives while managing the core business,” said Kingsbury.
That’s a task now in the hands of Buchanan, who will assume his new role as Kohl’s CEO and board member on Jan. 15 after leading Irving, Texas-based The Michaels Companies Inc. since 2020. Prior to that, he was with Walmart and Sam’s Club for a collective 13 years, serving in a variety of senior executive roles.
“(Buchanan’s) vast retail experience leading operations, merchandising and e-commerce will bring a steady, proven leader to Kohl’s as we continue to transform the business and drive future growth,” said board chair Michael Bender during the conference call. “Ashely has driven change by setting a clear vision, empowering teams and practicing organizational accountability for results. We know he will be a great leader and bring a new perspective in our next chapter.”
Shares of Kohl’s stock are trading at around $15.40 as of Tuesday afternoon, having fallen from $18.34 at Monday’s close.
