Advertisement
U.S. markets closed
  • S&P 500

    5,254.35
    +5.86 (+0.11%)
     
  • Dow 30

    39,807.37
    +47.29 (+0.12%)
     
  • Nasdaq

    16,379.46
    -20.06 (-0.12%)
     
  • Russell 2000

    2,124.55
    +10.20 (+0.48%)
     
  • Crude Oil

    83.11
    -0.06 (-0.07%)
     
  • Gold

    2,254.80
    +16.40 (+0.73%)
     
  • Silver

    25.10
    +0.18 (+0.74%)
     
  • EUR/USD

    1.0778
    -0.0015 (-0.14%)
     
  • 10-Yr Bond

    4.2060
    +0.0100 (+0.24%)
     
  • GBP/USD

    1.2621
    -0.0002 (-0.01%)
     
  • USD/JPY

    151.3450
    -0.0270 (-0.02%)
     
  • Bitcoin USD

    69,740.52
    -913.66 (-1.29%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,952.62
    +20.64 (+0.26%)
     
  • Nikkei 225

    40,369.44
    +201.37 (+0.50%)
     

Kohl’s Holiday Gift to the Retail Industry

Kohl’s Holiday Gift to the Retail Industry

(Bloomberg Opinion) -- The holiday shopping season is a crucial stretch for virtually every retailer. But it’s especially important this year for Kohl’s Corp. — for its own sake, and as part of the industry’s larger challenge of figuring out how to make the department store relevant in the digital era.

In general, Kohl’s is playing with a better hand than some of its closest rivals in the category. But it’s undeniable that the chain got off to a rough start this year. Comparable sales sank 3.4% from a year earlier in the first quarter, a result that was far below analyst estimates and that forced the chain to slash its annual earnings guidance. It recorded yet another decline in comparable sales in the second quarter, with weakness in the home goods, footwear and women’s apparel departments contributing to the gloom.

The company has promised the back half of the year will look significantly better largely thanks to two major projects: Accepting returns of Amazon.com Inc. purchases in its stores and adding a slew of new brands to its lineup. If there’s not clear evidence in the holiday rush that these initiatives are getting quick traction, it will raise serious doubts about the feasibility of a Kohl’s turnaround.

Kohl’s partnership with Amazon is one of the more intriguing in the retail industry. In theory, it should be a win-win situation, allowing Kohl’s stores to get a stream of new foot traffic and allowing Amazon to offer the convenience of returns in physical stores — something many shoppers prefer to returns by mail.

By the time holiday season heats up, Kohl’s will have had plenty of time to publicize this service. And the end of the holiday rush generally tends to be a peak time for merchandise returns. So this is kind of a natural experiment to see whether shoppers will take advantage of Kohl’s program and whether Kohl’s can convert any increased foot traffic into sales growth.

Kohl’s executives have also been talking a big game about the benefits they should reap in the holiday quarter from a “record level of newness” — retail jargon that basically means they have an unusually large batch of new brands coming into its stores in time for the holiday season.

Among its refreshed offerings are Nine West shoes, an exclusive women’s line by luxe designer Jason Wu and a home goods label from the stars of HGTV’s “Property Brothers.” A press release last week also ticked off a laundry list of beauty brands that are coming to Kohl’s, demonstrating its sensible investment in a category that has been a retail industry bright spot in recent years.

Kohl’s deserves some credit for understanding that better merchandise is at the heart of any retailing turnaround. But if all this effort at giving customers something new doesn’t contribute meaningfully to fourth-quarter comparable sales, then Kohl’s will have wasted time in its attempt to strengthen its merchandise.

It’s not that Kohl’s doesn’t have other ways to shore up the business. It is also shrinking its stores to help with profitability and experimenting with new in-store presentations.

But if these two big ones — the Amazon partnership and stable of new brands — don’t quickly pay off in the form of improved traffic and stronger comparable sales, then investors will not be happy. And in its continuing battle against the digital onslaught, the retail industry will have yet another data point about what doesn’t work.

To contact the author of this story: Sarah Halzack at shalzack@bloomberg.net

To contact the editor responsible for this story: Michael Newman at mnewman43@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Sarah Halzack is a Bloomberg Opinion columnist covering the consumer and retail industries. She was previously a national retail reporter for the Washington Post.

For more articles like this, please visit us at bloomberg.com/opinion

©2019 Bloomberg L.P.

Advertisement