Skip to main content
BoF Logo

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.

Kohl's Beats Profit Estimates as Amazon Partnership Pays Off

The department store chain partnered with the e-commerce giant to attract younger shoppers.
Kohl's department store exterior in Minneapolis, United States | Source: Shutterstock
By
  • Reuters

MENOMONEE FALLS, United States — Kohl's Corp beat tempered expectations for holiday-quarter profit on Tuesday as its partnership with Amazon.com brought in more shoppers, and said it would exit some women's brands to revive the struggling business.

The retailer was one of the department store chains to log lower sales for the holiday period, raising questions about the prospects of brick-and-mortar businesses in the face of fierce competition from online retailers.

To attract younger shoppers, Kohl's expanded its partnership with Amazon.com Inc to accept returns of products ordered online at all of its more than 1,000 stores.

"It's clear ... that Amazon is bringing in a newer and younger customer and bringing it into the stores," Chief Executive Michelle Gass told analysts.

ADVERTISEMENT

The company has also tied up with fitness centre operator Planet Fitness Inc to open workout centres near some of its stores.

Kohl's shares rose as much as 4 percent to $40.05 on Tuesday.

Still, analysts believe the company needs to improve its merchandise in the women's apparel category, where it lost out to newer styles from Target and other European brands during the all-important holiday season.

Gass said Kohl's would exit eight down-trending women's brands over the year, while introducing new brands to boost sales and hiring a new leadership team to manage the business.

For the fourth quarter, Kohl's reported flat comparable sales, citing slowness in the women's apparel category. It still managed to beat the average estimate of a 0.11 percent fall.

"They're getting the traffic now ... now the hyper focus on women's is obviously needed," said Gabriella Santaniello, founder of retail consulting firm A Line Partners.

"The problem with women's (category) is that... if the product doesn't resonate, it takes something extraordinary to get her back."

The company forecast 2020 earnings largely below Wall Street estimates as it offers heavy discounts to bring in shoppers.

ADVERTISEMENT

It expects earnings between $4.20 per share and $4.60 per share for fiscal 2020. Analysts were expecting a profit $4.59 per share, according to IBES data from Refinitiv.

Net income fell 2.6 percent to $265 million from a year earlier.

Excluding one-time items, the company earned $1.99 per share, beating the estimate by 11 cents. Analysts lowered their estimates after Kohl's last month said it expects full-year earnings to come in at the bottom end of an already lowered forecast.

By Nivedita Balu; editor: Saumyadeb Chakrabarty.

In This Article

© 2024 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions

More from Retail
Analysis and advice from the front lines of the retail transformation.

Op-Ed | How Long Can Adidas Surf the ‘Terrace’ Trend?

As a push to maximise sales of its popular Samba model starts to weigh on its desirability, the German sportswear giant is betting on other retro sneaker styles to tap surging demand for the 1980s ‘Terrace’ look. But fashion cycles come and go, cautions Andrea Felsted.


How Rent the Runway Came Back From the Brink

The rental platform saw its stock soar last week after predicting it would hit a key profitability metric this year. A new marketing push and more robust inventory are the key to unlocking elusive growth, CEO Jenn Hyman tells BoF.


view more

Subscribe to the BoF Daily Digest

The essential daily round-up of fashion news, analysis, and breaking news alerts.

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.
CONNECT WITH US ON
The Business of Beauty Global Awards - Deadline 30 April 2024
© 2024 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions, Privacy Policy, Cookie Policy and Accessibility Statement.
The Business of Beauty Global Awards - Deadline 30 April 2024