Kohl's Earnings Surprise Crash and Burn

[ClownLoach]

The Kohl's turnaround story is now in question after a surprise quarterly loss. Their stock is on track for its worst day ever.

https://www.cnbc.com/amp/2024/05/30/koh ... -2024.html

What concerns me is that the new CEO is blaming bad comparisons to last year when they were running massive clearance fire sales. They obviously lost a ton of money a year ago liquidating all the crap that they were buying under the previous CEO. But the overall enterprise still made a slight profit during the fire sales, and lost money this year.

I personally think that Kohl's has done a respectable job of cleaning up the stores, which were in disastrous condition under the previous CEO. And the merchandise quality and selection has improved greatly. Remember the previous CEO was delusional and thought the entire store should only be athleisure type clothing, basically a yoga pants superstore.

But I also think they are failing when it comes to value and price. They have too many lines of good quality product now that is priced at full MSRP every day. Couple that with coupons that have hundreds of exclusions and the product is going to just sit on the rack unsold. I struggle to find anything a coupon actually works on. Worse, the clearance pricing isn't even very good either so I have watched the same shirt sit for 6 months now and it is maybe 25% off the MSRP on its second clearance markdown. So for a brand that has trained its customers to shop on sale, they don't have much in the way of sales or coupons these days to get them in the door. Kohl's is going to have to work on this pricing issue first and foremost or they are going to be in real trouble.

[storewanderer]

Another retailer who played the "greedy" game so many retailers are playing. They thought consumers would just pay, pay, and pay the price increases and less generous sales. The customers fought back and quit buying.

Dangerous game to play with items that are so discretionary and non-essential like clothing.

This does not bode well for Kohls, its new CEO, or the future of the chain.

Blaming poor profitability this quarter on clearance sales in the same period last quarter - WHAT? Those clearance sales would have put major pressure on profitability last year. With those behind them this year their profitability should have improved...

I've been noticing how stuff sits and sits there without going on sale, and how the clearance items are marked down so slowly. They do some extra 50% off sales but even then it isn't great (that extra 50% off does work on the branded stuff though). Also they issue fewer coupons and the coupons have more restrictions than ever before. So again they are clearly going after the "profit" game but the customers revolted so strongly and closed their wallets that their greedy plan backfired. I am glad to see this.

This explains why the stores look better- way less traffic and nobody doing serious shopping...

I get email coupons random days for 40% off any purchase (with the numerous exclusions). The coupons are usually good for 1-3 days and one time use only. Not like the old days of Kohls where the coupons were given out like candy.

I don't know if Kohls is going to make it.

[rwsandiego]

...So for a brand that has trained its customers to shop on sale, they don't have much in the way of sales or coupons these days to get them in the door. Kohl's is going to have to work on this pricing issue first and foremost or they are going to be in real trouble.

Maybe they thought it worked so well for JC Penney that they should give it a try.

[storewanderer]

...So for a brand that has trained its customers to shop on sale, they don't have much in the way of sales or coupons these days to get them in the door. Kohl's is going to have to work on this pricing issue first and foremost or they are going to be in real trouble.

Maybe they thought it worked so well for JC Penney that they should give it a try.

It is another greedy, lazy retailer. They decided they could mark everything up and post "record profits." Customers would just keep paying and paying and paying without regard to the prices.

To their credit they improved mix and store environment in recent months, but it didn't really matter. Customers are more concerned with meeting their basic needs and expenses and quickly abandoned Kohls for places like Ross and the TJX chains. The customers who are less concerned about price are over at Macy's, Dillards, etc.

[ClownLoach]

...So for a brand that has trained its customers to shop on sale, they don't have much in the way of sales or coupons these days to get them in the door. Kohl's is going to have to work on this pricing issue first and foremost or they are going to be in real trouble.

Maybe they thought it worked so well for JC Penney that they should give it a try.

It is another greedy, lazy retailer. They decided they could mark everything up and post "record profits." Customers would just keep paying and paying and paying without regard to the prices.

And that didn't even happen, no record profits. Furthermore, now the analysts are questioning if all of the alleged improvements are really just the addition of Sephora, and if the core business is much worse than anyone thought... Maybe the high prices were in hopes of delivering ANY profit at all, and that failed.

Went tonight and the shirts I refused to pay $70 for are $18 on clearance now. I might have been a buyer if I could have had the 40% coupon apply before. Instead I bought at 75% off tonight. Yes, they're having another clearance fire sale. They gave every clearance item a real markdown finally to at least 45% to 60% off sticker price, and have posted "take another 50% off lowest ticket price." So history is repeating itself although they don't have nearly as much inventory on clearance as last January and February where it looked like a total store liquidation.

Three year stack of negative comp Q1 looks really bad.

[storewanderer]

Maybe they thought it worked so well for JC Penney that they should give it a try.

It is another greedy, lazy retailer. They decided they could mark everything up and post "record profits." Customers would just keep paying and paying and paying without regard to the prices.

And that didn't even happen, no record profits. Furthermore, now the analysts are questioning if all of the alleged improvements are really just the addition of Sephora, and if the core business is much worse than anyone thought... Maybe the high prices were in hopes of delivering ANY profit at all, and that failed.

Went tonight and the shirts I refused to pay $70 for are $18 on clearance now. I might have been a buyer if I could have had the 40% coupon apply before. Instead I bought at 75% off tonight.

Is there an extra 50% off on clearance now? I heard there was.

I was also reminded tonight when discussing this with someone else that Kohls has had multiple "extra 50% off clearance" sales in the past few months. So it is interesting they are saying they did not repeat clearance events... that is not true.

[ClownLoach]

It is another greedy, lazy retailer. They decided they could mark everything up and post "record profits." Customers would just keep paying and paying and paying without regard to the prices.

And that didn't even happen, no record profits. Furthermore, now the analysts are questioning if all of the alleged improvements are really just the addition of Sephora, and if the core business is much worse than anyone thought... Maybe the high prices were in hopes of delivering ANY profit at all, and that failed.

Went tonight and the shirts I refused to pay $70 for are $18 on clearance now. I might have been a buyer if I could have had the 40% coupon apply before. Instead I bought at 75% off tonight.

Is there an extra 50% off on clearance now? I heard there was.

I was also reminded tonight when discussing this with someone else that Kohls has had multiple "extra 50% off clearance" sales in the past few months. So it is interesting they are saying they did not repeat clearance events... that is not true.

Yes was just editing my post to clarify. I think technically they started the extra clearance in Q2.

[storewanderer]

And that didn't even happen, no record profits. Furthermore, now the analysts are questioning if all of the alleged improvements are really just the addition of Sephora, and if the core business is much worse than anyone thought... Maybe the high prices were in hopes of delivering ANY profit at all, and that failed.

Went tonight and the shirts I refused to pay $70 for are $18 on clearance now. I might have been a buyer if I could have had the 40% coupon apply before. Instead I bought at 75% off tonight.

Is there an extra 50% off on clearance now? I heard there was.

I was also reminded tonight when discussing this with someone else that Kohls has had multiple "extra 50% off clearance" sales in the past few months. So it is interesting they are saying they did not repeat clearance events... that is not true.

Yes was just editing my post to clarify. I think technically they started the extra clearance in Q2.

Three year stack of negative Q1 comps isn't unlike other nearly dead department store chains that are loaded up with debt and too many leased buildings. Chains like Nordstrom or Dillard's with less or no debt and more owned real estate may be able to survive that sort of thing but this is not a good spot for Kohls to be in.

Speaking of Dillards- was in that store in Stockton. The place does a booming business. In Stockton. I could not believe it. That is the busiest Dillards I've ever seen. Actually the town Stockton seems healthier than it used to be. Or maybe it is the literal rot and deterioration of multiple sections of the bay area that has occurred lately and that Stockton has just stayed the same... but I felt a lot safer going around most of Stockton, than I do in a lot of parts of the bay area.

[Super S]

I went into a Kohl's in the Portland area a few weeks back. The men's department was a complete joke. NO big & tall sizes at all, prices were high. And the thing that puzzled me the most is how they have completely removed the registers from one set of doors, which can't be good from a loss prevention standpoint. It's another example of a store with such poor selection that it sends their remaining customers online, and not always to the Kohl's website.

A good start would be to have more variety in store if you actually want customers.

[ClownLoach]

I went into a Kohl's in the Portland area a few weeks back. The men's department was a complete joke. NO big & tall sizes at all, prices were high. And the thing that puzzled me the most is how they have completely removed the registers from one set of doors, which can't be good from a loss prevention standpoint. It's another example of a store with such poor selection that it sends their remaining customers online, and not always to the Kohl's website.

A good start would be to have more variety in store if you actually want customers.

I believe Kohl's is still using e-commerce distribution centers, which basically necessitate reducing store inventories to maintain the separate facilities. One of the most important changes being made today by relevant retailers is the closure of those separate e-commerce facilities and introduction of store order shipments. It has been proven separate e-commerce warehouses are a waste of resources for most chains that are SKU intensive such as department stores.