Kohl's experiences 11% drop in comparable sales in Q4, sees boost in online sales
Menomonee Falls, Wisconsin-based department store company Kohl’s saw its comparable sales decrease by 11% in the fourth quarter of 2020, a dip cushioned by digital sales increasing by more than 20%.
The company's total revenue for the quarter ended January 30, 2021 declined approximately 10%. Based on this and the drop in comparable sales, Kohl's said it expects fourth quarter 2020 diluted earnings per share to be in the range of $1.00 to $1.05, before considering any impact from tax planning strategies.
Digital sales accounted for more than 40% of the company's net sales, with stores playing a critical role in supporting the heightened demand.
"We are very pleased with the continued progress we are making against the strategic framework we outlined in October 2020," said Michelle Gass, Kohl’s chief executive officer.
"Our fourth quarter performance exceeded our expectations across all key metrics with sales strengthening as we moved through the period. Digital sales growth remained strong, up more than 20%, and accounted for more than 40% of net sales, with our stores playing a critical role in supporting the heightened demand. Our focus on gross margin showed further traction and we managed expenses tightly, which together strengthened our financial position. I want to thank all of our associates for their exceptional service during the highly unique holiday period.”
Gass continued: “As we carry this momentum into 2021, we are confident that our key strategic initiatives will accelerate our top line growth and expand our operating margin."
In particular, the company's CEO highlighted Kohl's new long-term strategic partnership with Sephora, which was first announced in December. As part of the deal, the makeup mega-retailer is set to open shops at about 850 Kohl's stores by 2023.
"Our partnership with Sephora will launch this fall in 200 stores and online, commencing a multi-year buildout that will drive significant growth for Kohl’s," Gass said.
"We look forward to sharing more on this and our other initiatives, as well as providing more detail on our path to 7% to 8% operating margin, on our upcoming earnings call in March.”
The company said the preliminary results reflect a better-than-expected gross margin rate and strong SG&A expense management, and said that gross margin continued to benefit from disciplined inventory management and further optimization in promotional strategies.
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