Add Kohl’s to the list of top-tier retailers that experienced a disappointing first quarter of fiscal 2022.
During the quarter ended April 30, 2022, Kohl’s Corp. followed positive low-single-digit same-store sales through late March with what it termed a “considerable” weakening of sales in April. Net sales and same-store sales declined 5.2% for the quarter compared to the same quarter a year earlier, while total revenue fell 4.4% to $3.71 billion from $3.89 billion.
Kohl’s cited external “macro headwinds,” including the end of government stimulus payments and inflation, in its quarterly results missing expectations.
The company also provided an update on its exploration of a potential sale, following its recent successful effort to fend off activist investor Macellum Capital Management’s bidto take control of its board.
“Regarding our review of strategic alternatives, we continue to engage with multiple interested parties,” said Kohl’s CEO Michelle Gass. “We have formally communicated the specific procedures for the submission of actionable bids due in the coming weeks. We continue with our detailed diligence phase and are pleased with the number of parties who recognize the value of our business and plan.”
The Kohl’s board says it has designated its finance committee to lead an ongoing review of expressions of interest in an acquisition, and has engaged Goldman Sachs to explore strategic alternatives. To date, the retailer says over 25 parties have discussed possible acquisitions, with multiple bidders invited to a data room containing over 550,000 pages across over 55,000 documents, as well as meetings with management.
Preliminary, non-binding purchase proposals have been received, but further diligence is ongoing and the board has requested fully-financed final bids to be submitted in the coming weeks.
Gass also commented on the continuing program to roll out Sephora shops within Kohl’s stores.
“We remain committed to our long-term strategy and are encouraged that our updated store experience, with Sephora at Kohl’s shops, delivered positive comparable store sales across these 200 locations for the quarter,” said Gass. “We continue to expect our business to improve as the year progresses, with growth in the second half as we benefit from the rollout of 400 additional Sephora stores, enhanced loyalty rewards and further investment in our stores.”