Kohl’s Corp. is still waiting for its strategy to roll out Sephora and become the nation’s destination for active and casual offerings to show some fruit.
As expected, the Menomonee Falls, Wisconsin-based Kohl’s on Wednesday reported top and bottom-line declines for the fourth quarter and for all of 2022, but sees less of a sales decline in the year ahead.
For the quarter ended Jan. 28, the net loss amounted to $273 million, or $2.49 per diluted share, compared to net income of $299 million, or $2.20 per diluted share, in 2021. The figure, falling below Wall Street’s expectations, pulled the stock price down around 7 percent by 8 a.m. in pre-market trading Wednesday.
Net sales decreased 7.2 percent to $5.8 billion from $6.2 billion with comparable sales down 6.6 percent.
“Kohl’s fourth quarter results reflect meaningful proactive measures we took to better position the business for 2023, as well as sales pressure driven by the ongoing persistent inflationary environment,” Tom Kingsbury, Kohl’s chief executive officer, said in a statement. “Kohl’s has a solid foundation and a highly motivated team with a set of priorities to capitalize on what I see as a substantial opportunity to make a difference in the retail landscape.
“Our efforts to drive the business are already underway,” added Kingsbury. “We are refining our strategy and re-establishing merchandise disciplines with a customer-centric focus across the organization. I am confident that our efforts will drive improved, and more consistent, sales and earnings performance over the long-term.”
In the past month, top management has been rebuilt. Dave Alves became president and chief operating officer. Nick Jones became chief merchandising and digital officer. And Kingsbury became CEO after serving for a brief period as interim CEO.
In other results for the quarter, inventory was $3.2 billion, an increase of 4 percent year-over-year.
The operating loss was $302 million compared to operating income of $450 million in the prior year. Operating cash flow was $707 million driven by improvements in working capital during the fourth quarter of 2022.
Selling, general & administrative (SG&A) expenses decreased 0.6 percent year-over-year, to $1.7 billion.
For all of 2022, there was a net loss of $19 million, or $0.15 per diluted share. This compares to net income of $938 million, or $6.32 per diluted share, and adjusted net income of $1.1 billion, or $7.33 per diluted share, in the prior year.
Net sales decreased 7.1 percent year-over-year, to $17.2 billion from $18.5 billion with comparable sales down 6.6 percent.
Operating income was $246 million compared to $1.7 billion in the prior year. As a percentage of total revenue, operating income was 1.4 percent, a decrease of 729 basis points year-over-year. Operating cash flow was $282 million.
SG&A expenses increased 2 percent year-over-year, to $5.6 billion.
For 2023, the forecast is as follows:
- Net sales will decrease 2 to 4 percent, including the impact of the 53rd week which is worth approximately 1 percent year-over-year.
- Operating margin will be approximately 4 percent.
- Diluted earnings per share will be in the range of $2.10 to $2.70, excluding any non-recurring charges.
- Capital expenditures are seen in the range of $600 million to $650 million, including expansion of its Sephora partnership and refreshing stores.