Kohl’s says it has finally found its footing — bosses are crediting promotions, brand-name products, and back-to-school shoppers for the turnaround.
The retailer, based in Wisconsin and operating 1,153 stores in the US, saw its net profit more than double to $153 million in the last quarter. This notable achievement resulted in a 20 percent surge in the company’s stock on Wednesday.
The win is sorely needed. In May, the company ousted its CEO after just 100 days, amid lower sales and a series of store closures.
Kohl’s, recognized for its selection of affordable apparel, footwear, and household items, attributes its success to maintaining value and brand consistency. This strategy has similarly benefited several other established retailers this earnings season.
Michael Bender, the company’s interim CEO, mentioned efforts to correct previous errors by bringing back the petite section, refreshing the jewelry offerings, concentrating on affordable and exclusive brand collaborations, and increasing the utilization of coupons.
‘As we reestablished the petites category in all stores, this business accelerated, up almost 40 percent in the second quarter,’ Bender said.
Sales in rebooted jewelry grew by 12 percent, and Sephora’s pop-ups had a three percent increase.
But independent experts told the Daily Mail that they’re skeptical about Kohl’s turnaround.
Kohl’s said it is reeling in customers with promotions and better products – analysts say there are underlying problems
‘Their management has put an optimistic spin on their numbers,’ Neil Saunders, a retail analyst at GlobalData, said.
The company’s stock has experienced significant fluctuations. In July, its shares surged by 105 percent, influenced by retail investors inspired by Reddit who heavily invested in the brand, reminiscent of the 2021 meme stock phenomenon that dramatically raised struggling companies’ stock prices.
However, Kohls also noted a 5.1 percent drop in overall sales, alongside a $129 million cash infusion from a one-time lawsuit settlement.
Without that, Saunders says, the company’s income would have been 63 percent in the red.
Despite these financial outcomes, many stores reportedly appear disordered and lack appeal, which, according to observers, leads to a continued loss of customers and market share.
‘There is nothing optimistic about a continued sales decline that is way worse than most retail peers are delivering.’
Still, Kohl’s executives are leaning hard on a back-to-basics playbook — the same formula other retailers have used to steady the ship.
‘We really think we’re set up well,’ the company’s CFO, Jill Timm, said while reporting the second straight quarter of better-than-expected sales.
Kohl’s has had major celebrity endorsements, like Ellie Kemper, the star actress from Unbreakable Kimmy Schmidt
Independent analysts described Kohl’s stores as ‘mess’ and ‘completely devoid of inspiration’
Still, the stock has had a huge rise – it is also benefitting from a Reddit thread that is trying to hurt short positions in the company
Neil Saunders told the Daily Mail that the company’s underlying numbers are still worrying
‘As we’re bringing product lines back, we’re seeing we’re gaining that trip back from the customer.’
They also highlighted successful partnerships with Levi’s Jeans, Nine West, and Nike on the earnings call.
Bender also said stores are selling out of fleece outerwear, backpacks, and trendy jeans.
The company’s CFO, Jill Timm, praised the return of jewelry and Kohl’s petite sections
‘Anything baggy, wide leg, those types of features in denim are showing strength,’ he said.
But Saunders said growth was easy for a chain that has been hemorrhaging customers for several quarters.
‘The outlook for the balance of the year is not as bad as feared, but that does not mean it is good,’ he said.
Still, the back-to-basics strategy mirrors many of the winners in this earnings season. Retailers that stuck to their core identity and lured shoppers with discounts have logged some of the strongest results and Wall Street reactions.
Chili’s, the 1,200-unit Tex-Mex chain, notched a 24 percent sales bump after splashing promotions across TikTok. McDonald’s posted banner results by cutting prices.
Same for Campbell’s Soup, Amazon, Hershey’s, Dollar General, and Apple, which all saw major boosts on their lower-cost products.
The opposite has been true for brands that strayed too far from what made them successful.
Cracker Barrel, for instance, has faced days of blowback after rolling out new logos and ditching its rustic in-store design — a gamble that left many longtime customers cold.
Target has also continued its downturn after offending conservative customers with Pride collections and liberal customers for walking away from DEI promises.
