Kohl’s promise of “aggressive action” to offset declining sales

• Kohl’s said comparable sales fell 9.3% in the third quarter.
• Apparel and footwear sales struggled despite strong performances at Sephora and other categories.
• Gains in beauty sales at Sephora were one of the few bright spots.

Kohl’s continues to face an uphill battle after sales plummeted due to missed opportunities, a decline in customer traffic and an overreliance on its partnership with Sephora.

The department store chain’s comparable sales fell 9.3% in the three months ended Nov. 2, which CEO Tom Kingsbury called “frankly disappointing” despite attempts to improve its products, strategy and shopping experience.

SIn apparel and footwear, Ales remained weak despite strong performances in the Sephora, home decor, gifts and impulse categories.

“We are not satisfied with our performance and are taking aggressive actions to reverse the decline in sales,” he said.

Net income fell to $22 million in the third quarter, compared with $59 million in the same period last year.

Kohl’s now expects comparable sales for the full year 6% to 7% lower compared to 2023.

Shares closed down 17% on Tuesday, bringing their decline this year to 45% and valuing the company at less than $1.6 billion.

Earlier this week, Kohl’s said Kingsbury would step down on Jan. 15 after two years in the position. It is replaced by Retail veteran Ashley Buchanan.

Investments in key growth categories had a ricochet effect, leading to a 20% decline in private label inventory, Kingsbury said. “The lack of private labels hurts our ability to serve our customers.”

The decision to focus on fine jewelry and focus on Sephora, which now has about 1,050 concessions at Kohl’s locations as part of a partnership that began in 2021, has also had an impact.

“When we introduced Sephora Shops to our stores, the fine jewelry business was largely displaced, resulting in ongoing headwinds to our sales performance over many periods,” Kinsbury said.

Although the partnership is one of the few bright spots this quarter, and overall cosmetics sales increased 15% this quarter, it could mean that Kohl has missed opportunities to capitalize on a hot category.

Claudia D’Arpizio, senior partner and global head of fashion and luxury at consulting firm Bain, told Business Insider that jewelry was the “most resilient category” for the luxury goods industry last year.

Jewelry, along with beauty and fragrances, is an affordable luxury category that is particularly in demand among younger customers who have been underserved by luxury players in recent years, D’Arpizio said.