Challenging holiday takes toll on Kohl’s profit

Positive trends with its online business were not enough to help Kohl’s offset in-store weakness and intense competition, which pressured profits and caused a significant downward revision in guidance.



Kohl’s said its fourth quarter same-store sales increased 0.4% while the digital business grew 30%. Full year same store sales increase 0.7%.



“While we experienced our fifth consecutive quarter of positive comparable sales increases, sales were very volatile and less than planned in the fourth quarter. We experienced a very strong holiday selling season from the week of Thanksgiving through Christmas,” said Kohl’s chairman, CEO and president Kevin Mansell. “These results were offset by a very slow start to the quarter in early November and a weaker-than-expected January as soft demand for cold-weather goods led to lower store traffic in these more discretionary shopping periods. We were pleased with the performance of our digital business as online generated orders and sales each grew approximately 30% during the quarter. Our ability to provide both ship-from-store and buy online, pickup in store capabilities in all stores really resonated with our customer.”



The company is scheduled to report fourth quarter results on Feb. 25, but warned its profits will be less than planned. Because of the fourth quarter weakness, the company said its full year earnings per share on an adjusted basis will fall between $3.95 to $4, well below earlier guidance, which envisioned earnings in the range of $4.40 to $4.60 per share.



“The change in guidance is a result of lower than planned sales for the quarter and significantly lower than planned gross margin. Gross margin was affected by the origin and timing of the sales in addition to the competitive promotional environment which resulted in higher than expected markdowns on both year-round and seasonal merchandise,” according to a company statement.



The company did indicate that footwear and home were the strongest performing categories while accessories was the weakest. On a regional basis, the West region was the strongest while the Mid-Atlantic and South Central regions were the most difficult, according to the company.