Kohl’s vows ‘aggressive action’ to reverse sliding sales

• Kohl’s said comparable sales fell 9.3% in the third quarter.
• Apparel and footwear sales struggled despite strong results for Sephora and other categories.
• Growth in revenue from beauty sales at Sephora was one of the few rays of hope.

Kohl’s continues to fight an uphill battle after sales fell due to missed opportunities, a decline in foot traffic and an overconfidence in its partnership with Sephora.

Like-for-like sales at the department store chain fell 9.3% in the three months to November 2, which chief executive Tom Kingsbury called “frankly disappointing” despite efforts to improve its products, strategy and store experiences.

pales remained soft in apparel and footwear despite strong performances for the Sephora, home decor, gifts and impulse categories.

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

Net income fell to $22 million in the third quarter, down from $59 million for 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 the 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 Jan. 15 after two years in the role. He will be replaced by retail veteran Ashley Buchanan.

Investment in key growth categories had a ricochet effect, leading to a 20% drop in private label inventory, Kingsbury said. “Not having the appropriate level of private labels hurts our ability to serve our customers.”

The decision to pull back on fine jewelry to focus on Sephora, which now has about 1,050 concessions in Kohl’s locations under a partnership that started in 2021, has also had an impact.

“When we introduced Sephora Shops into our stores, the fine jewelry business was largely displaced, resulting in a sustained headwind to our sales results for many periods,” Kinsbury said.

While the partnership is one of the few bright spots in the quarter, which saw overall beauty sales rise 15% in the quarter, it could mean Kohl’s 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 has been the “most resilient category” for the luxury goods industry over the past year.

Jewelry, along with beauty and fragrance, are affordable luxury categories particularly in demand with younger customers who have been underserved by luxury players in recent years, D’Arpizio said.