Kohl’s Corp.’s first-quarter declines were steeper than expected after stores closed due to the coronavirus pandemic, although about half of its fleet has now reopened.
In a Nutshell: Kohl’s saw online sales rise 24 percent in the quarter, and over 60 percent in April, as consumer purchases migrated online in the absence of brick-and-mortar stores. The coronavirus outbreak saw nonessential retailers closing their stores in mid-March to help curtail the spread of the contagion.
“We entered the year in a strong financial position and our business was tracking to our expectations prior to the onset of the crisis. We immediately responded with actions to protect the health and safety of our associates and customers and to preserve our financial position,” CEO Michelle Gass said.
Those actions included managing inventory receipts “meaningfully lower,” which sparked outcry from a Korean textile group facing substantial losses. Kohl’s also reduced expenses across the business, slashed planned capital expenditures by $500 million, replace and augmented a revolver to a $1.5 billion secured facility, and issued $600 million in notes, the company said.
Net Sales: For the quarter ended May 2, total revenues fell 40.6 percent to $2.43 billion from $4.09 billion a year ago. Total revenues include a 43.5 percent drop in net sales to $2.16 billion from $3.82 billion.
Kohl’s has now reopened nearly half of the more than 1,100 stores it operates across the country, and said it finished the quarter with $2.0 billion in cash.
Earnings: The retailer posted a net loss of $541 million, or $3.52 cents a diluted share, against net income of $62 million, or 38 cents, a year ago. On an adjusted basis, the loss per share was $3.20.
Wall Street was expecting an adjusted diluted loss per share of $1.75 on revenues of $2.16 billion.
Like many other retailers, Kohl’s previously withdrew its full-year guidance due to uncertainties surrounding the COVID-19 pandemic.
CEO’s Take: “We have begun the rebuilding process, recently reopening about 50 percent of our stores across the country. In doing so, we have taken special care to equip our stores with the latest health and safety measures as we welcome back our associates and customers,” Gass said. “As we look ahead, we know this experience will have a lasting impact to customer behavior and the retail landscape, as we are evolving our strategies to ensure our relevance and to capture market share.”