Kohl's plans to make a lot of interesting moves this year with new formats and underperforming stores after the company reported another lackluster quarter of financial results.
For the fourth quarter ended Jan. 30, Kohl's said same store sales rose 0.4%. Total sales rose only 0.8% as unseasonably warm weather hurt sales of cold-weather goods. Revenue totaled $6.39 billion, up 0.8% from a year ago. Net income was $296 million, down 20%. Earnings per share for the quarter came in at $1.58, down from $1.83 a year ago.
Yet the companysays that its slate of initiatives — called the "Greatness Agenda" — is positively influencing sales growth.
“We believe that the strategic framework of the Greatness Agenda is working as evidenced by our achievement of five consecutive quarters of positive comparable sales increases. I am particularly encouraged by the 4% increase we saw between Thanksgiving and Christmas. At the most competitive time in retail, customers were choosing Kohl’s,” said Kevin Mansell, Kohl’s chairman, president and CEO. “This strength, however, was substantially offset by softness in early November and in January when demand for cold-weather goods was especially low, resulting in a quarterly comparable sales increase of 0.4%, which was below our expectations.”
As part of the company’s efforts to find new and innovative ways to drive sales, in 2016, Kohl’s plans to:
Pilot a new smaller format Kohl’s store, opening seven of these stores in various regions around the country;
Add two additional Off-Aisle pilot stores in Wisconsin; and
Open 12 Fila outlet stores, which will mark Kohl’s first entry into the outlet space.
The company also said it plans to close 18 underperforming stores, representing less than 1% of total sales. The specific locations will be announced by the end of March. The closures are expected to generate annual SG&A savings of approximately $45 million and annual depreciation savings of approximately $10 million. The company currently expects to incur approximately $150 million - $170 million in charges as a result of these planned closures and the organizational realignment at the Company’s corporate offices which occurred earlier this month.
“While the decision to close stores is a difficult one, we evaluated all of the elements that contribute to making a store successful, and we were thoughtful and strategic in our approach. We are committed to leveraging our resources on our more productive assets,” Mansell said.“We see exciting growth potential in the new stores and new formats that we are opening this year and are heavily investing in the health of our overall stores portfolio to continue to serve our current and future customers. A vital component of our omnichannel approach is to clearly understand the evolving retail environment and ensure that we are well-positioned to leverage our resources on productive projects.”
Looking ahead, the company expectsearnings of $4.05 to $4.25 per share for the year ending January 2017. It also forecast full-year sales to fall or grow by only up to 0.5%.
