Menomonee Falls, Wis. – Kohl’s is planning to take a hit on both sales and profit this year as it reworks the product mix to recapture lost business.
Under the leadership of CEO Ashley Buchanan, who officially took up the position on Jan. 15, Kohl’s is focused on rebuilding business with its core customers, some of whom were put off as Kohl’s chased top-line growth by rolling out new categories.
He laid out three initiatives that he described as “tactical, short-term, no-regret moves.” They include:
- Regaining traction in categories that have lost business over the past few years as Kohl’s expanded space for impulse items, gifts and home décor. Those categories include the legacy home assortment, fine jewelry, petites and intimate apparel.
- Driving improved assortment clarity across all categories, which will involve reinvigorating some of the company’s private label brands.
- Building on momentum in key growth categories: Sephora, home decor and impulse.
“It’s going to take some time,” Buchanan told investors during this morning’s Q4 review call. “This is a long lead time business – we’re looking at 9 months, in some cases, to get product in.”
Kohl’s probably won’t see the initial results from those changes until next year, he added.
During the recent fourth quarter, ended Feb. 2, sales fell 9.4% to $5.2 billion, and comp dropped 6.7%. Sales were strong in impulse, gifting, home décor and baby gear, but that wasn’t enough to overcome the slack business in bedding, kitchen electrics and floor care.
Online sales tumbled 13.4% during the quarter, in large part due to softness in legacy home, which is over-penetrated on Kohl’s web platform, according to CFO Jill Timm.
Kohl’s is also reworking its approach to coupons, which have become overloaded with restrictions on products and brands they wanted to buy.
“We really polarized our core customer,” said Timm.
She noted that Sephora shop-in-shops have brought in a lot of new customers, about 35% of whom buy something else while they are in the store.
The company’s 2025 outlook, she added, reflects both the economic uncertainty consumers are facing and the amount of time Kohl’s will need to make changes to its assortment.
The company is expecting net sales for the year to decrease 5% to 7%, with comps expected to drop in a range of 4% to 6%. Diluted earnings per share are expected to land in the range of $0.10 to $0.60 vs the $0.98 generated in 2024.
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