Kohl’s has an inventory mess on its hands

Looks like Kohl’s can’t catch a break, and may only have himself to blame for that. People walk near Kohl’s department store on June 7 in Doral, Florida (Joe Riddle, Getty Images)

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NEW YORK — It looks like Kohl’s isn’t catching a break, and only himself can be blamed for it.

The department store chain presented a door to door outlook for 2022 on Thursday, saying it expects full-year sales to decline 5% to 6% compared to a year ago and is expected to drop higher to prevent shoppers. Blames inflation – especially its middle-income consumers – from spending more at its stores. The company also reported a decline in sales and profit for the quarter ended July 30.

Kohl’s stock fell more than 7% on Thursday.

But the economy is not its only problem. Kohl’s, similar to other large chains, including Target and Walmart, is stuck with too much excess inventory that it can’t clear. The chain’s inventory in the quarter was up 48% over the same period last year.

“We have adjusted our plans, implemented actions to reduce inventory and reduced spending for a softer demand outlook,” Kohl’s CEO Michelle Gass said in a statement.

unstable course

With more than 1,100 US stores and annual sales of approximately $19 billion, Kohl’s is the largest department store chain in the United States. But the company has struggled to find a way forward for itself.

Kohl’s floated and then withdrew the idea of ​​selling itself to Franchise Group, a holding company that owns The Vitamin Shoppe and other retail brands, which the company said was due to financing issues and a difficult economic environment. was due to.

The retailer is employing a variety of tactics to stay relevant, especially for younger consumers. It recently partnered with popular cosmetics brand Sephora to open mini-Sephora stores at their locations. Kohls said the move has helped it gain a million new customers since last August who are smaller, more diverse and shop more frequently than the average consumer.

And last week, the retailer announced that it was rolling out a self-pickup option at all of its stores for online orders within a two-hour window.

But all these efforts, although necessary for Kohl’s, cannot completely hide the chain’s most fundamental problem, said Neil Saunders, retail analyst and managing director at GlobalData Retail.

“In our view, the main source of Kohl’s woes is internal. Most notably, the company has lost ground in terms of merchandising and range planning and appears to be taking a random approach to buying. The result is unrelated products. The disturbance is due to a “very serious drop in shoplifting standards, which has worsened in stores,” Saunders said in a note on Thursday.

Saunders said, “It used to be that while a little nostalgic, Kohl was disciplined and clean in his presentation. It’s all gone out the window in the past year.” “In such an economic environment, consumers will quickly abandon purchases and stores that require a lot of effort for little reward.”

Kathryn Miklosic, who lives in the Toronto area, said she has shopped at department store chains for decades, and is such a devoted Kohl’s fan that whenever she travels to the United States, she takes a Kohl’s card and a Kohl’s card with her. Takes discount coupons.

“I usually spend several hundred dollars on each trip,” she said. “As a cross-border shopper, I enjoy getting clothes in the US that are different from the stores here. (Kohle’s) sales are amazing and until recently so much for clothing, purses, home goods, and seasonal decor. All the options were there.”

But his last visit to Kohl’s in Watertown, NY, on August 13, was disappointing. Miklosik said he left the store “in a panic attack from the jumbled mess and chaos.”

“On this trip I spent $12.10 on a reusable shopping bag with Kohl’s logo, and two stuffed animals with the proceeds going to the Kohls Cares Foundation,” she said. “I even told the cashier that I was so overwhelmed that I had to leave, and I’d probably try again the next day. I didn’t.”

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